The profit or loss section of the statement of comprehensive income of CPA Company for the year ended December 31, 2021 reproduced below: Sales Cost of goods sold Gross profit Gain on sale of equipment Salaries expense Insurance expense Depreciation expense Profit before interest and income tax Interest expense Profit before income tax Income tax expense Profit The following information is also available: Decrease in accounts receivable Increase in inventory Decrease in accounts payable Increase in salaries payable Increase in prepaid insurance Decrease in interest payable Amortization of premium on bonds payable Increase in income tax payable Decrease in deferred tax assets Decrease in deferred tax liability P6,100,000 3,700,000 P2,400,000 100,000 (820,000) (380,000) 220,000 P1,080,000 120,000 P 960,000 288,000 P 672,000 P 120,000 280,000 160,000 100,000 180,000 30,000 25,000 18,000 40,000 22,000 Required: Prepare the operating activities section of the statement of cash flows using the dire method and indirect method.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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The profit or loss section of the statement of comprehensive income of CPA Company for the
year ended December 31, 2021 reproduced below:
Sales
Cost of goods sold
Gross profit
Gain on sale of equipment
Salaries expense
Insurance expense
Depreciation expense
Profit before interest and income tax
Interest expense
Profit before income tax
Income tax expense
Profit
The following information is also available:
Decrease in accounts receivable
Increase in inventory
Decrease in accounts payable
Increase in salaries payable
Increase in prepaid insurance
Decrease in interest payable
Amortization of premium on bonds payable
Increase in income tax payable
Decrease in deferred tax assets
Decrease in deferred tax liability
P6,100,000
3,700,000
P2,400,000
100,000
(820,000)
(380,000)
220,000
P1,080,000
120,000
P 960,000
288,000
P 672,000
P 120,000
280,000
160,000
100,000
180,000
30,000
25,000
18,000
40,000
22,000
Required: Prepare the operating activities section of the statement of cash flows using the direct
method and indirect method.
Transcribed Image Text:The profit or loss section of the statement of comprehensive income of CPA Company for the year ended December 31, 2021 reproduced below: Sales Cost of goods sold Gross profit Gain on sale of equipment Salaries expense Insurance expense Depreciation expense Profit before interest and income tax Interest expense Profit before income tax Income tax expense Profit The following information is also available: Decrease in accounts receivable Increase in inventory Decrease in accounts payable Increase in salaries payable Increase in prepaid insurance Decrease in interest payable Amortization of premium on bonds payable Increase in income tax payable Decrease in deferred tax assets Decrease in deferred tax liability P6,100,000 3,700,000 P2,400,000 100,000 (820,000) (380,000) 220,000 P1,080,000 120,000 P 960,000 288,000 P 672,000 P 120,000 280,000 160,000 100,000 180,000 30,000 25,000 18,000 40,000 22,000 Required: Prepare the operating activities section of the statement of cash flows using the direct method and indirect method.
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