Question

COMPLE THE ANSWER

SAT 1.5

During the year 2020, the Belleview Company had generated total sales revenue of P1,000,000, of which P990,000 were collected during the year, including collections of P120,000 sales revenue made in 2019. The company purchased goods costing P600,000, paid P650,000 to merchandise suppliers including payment for goods purchases in 2019 of P80,000. Included in P180,000 operating expenses was depreciation of P35,000. Accrued operating expenses decreased by P12,000 from January 1, 2020 to December 31, 2020. The company paid interest of P6,000 and income taxes of P90,000 during 2020. 1. How much operating expenses were paid in cash during 2020? 2. How much was provided by/(used in) operating activities during 2020?

SAT 1.6

SAT 1.7

SAT 1.8

SAT 1.9

SAT 1.10

Answer 1

SAT 1.5 :- I) Operating expencer :- Operating expencer one often abbreviated al opex. there expenses ale incurred in the normal Courro of business Example Rent, inventory Cost, and insurance etc. II) Non-Cash Operating expenser :- Non-Cath operating expenses are those expenses which we recorded in the books of account: but wie hot actually paid in Cashe Example :- Deprecahon 1. Calculation of operating expense paid in Cash during 2020- Total Operating Expense P180,000 less - Non-Cash operating P 35,00 expense:- (Debrecation) Operating, expence Powdin P 145, coo Cash Hence, Cash operating- expenses will be P145,000 CS Scanned with CamScanner

2. Calculation of Operating Income for dodo :- Sales : P1000,00 less:- Cost of Goods Sold ip 600,coo Giross Income 2 P 400, coo Leiri- Operating expenses :P 180,000 Ald:- Dearcase in operating expenses accrued SP 12,000 during the year Operating Income : P 232,000 Hence, operating expenses for the current year would be (P 168.coolcie. P180,000 - 12,000). CS Scanned with CamScanner

SAT 1.6 Solution : formula for Calculation of deprecation of the Current year: - • XXX cloang balance of Accumulated Debrecichbn Ale Add:- Depreciation of the asset Sold lett :- opening balance of acumulated depreciation Alc Deprecation of Current year: Sold * Calculation of depreciation of 2020 :- Closing bal. of acumulated : 1.200, coo depreciation olc Add:- Depreciation of oxer : 100,00 Lers a- opening balance of : 1.020,00 accumulated depreciation a/c Depreciation of 2020 : 280,000 → Hences as per above calculation Depreciation for Year 2020 will be 280,000 CS Scanned with CamScanner

Calculation of Deprecation of Machine Sold during $020 :- Cost of machine sold : 400, cro les - Cash received on Sale : 260,000 less :- Loss on sale 40,000 Deprecahon of machine Sold: 100, coo * for further clarification refer the below menhoned journal entry :- Cash Al 260,000 loss on sale Ale Dr. 40,000 Accumulated Depreciahon file or Ico, coo (814) TO Machinery Ale 4,00,000 CS Scanned with CamScanner

SAT 16 Solution 2 :- Amount For the purpose of Calcutating cost of machinery purchased in 2020 , the draft machinery altount in T-form is shown below 1- Machinery Alc (Draft) fculhculous Pourficulous Amount To bal old 3500, Cod By Cost of Machinery 400,000 Cold To Cash Alc 1100,CDC (machinery ferchased (Balancing By bal old 3,200,00 figure) 3,6co, co 3,600,000 It is clear from the above account that Cost of Machinery puschaled in 2000 is 1.100.com CS Scanned with CamScanner

SAT 1.7 end - xxx Solution :- formula for Cakulation of Cash balance at year (A) Cash flows from operating activities (8) Cash flow from Investing achivitel (0) Cash flows from financing activities xxx Net Increase (decrease) in Cash and Cash equivalente (A+B+C) Adet :- Cash and Cash equiolenta at the beginning Cash and Cash equivalents at the end CS Scanned with CamScanner

Calculation of closing Cach balonce in the present Care a (A) Cash flows from operating activities 400,00 (B) Cash flows from financing activities I coo,coo C) Cash Flows from Investing activities (1,5co, coo) Net (clecrease) in Cash bau. (+8+) Ċ too, cou) Add: Cash at the beginning 1,300,000 1,200,000 Cash and cash equivalents at the end Hence, Cash balance at the end of the year is 1,200,cool, ( CS Scanned with CamScanner

. SATI.8 Calculation of Net cash flow from operating a chivities using Indirect method :- Cash flow from operating Activities - Net Income : 250,000 + Non Cash Expenses 1,000,coo CDepreciation) + Non operating lors 210,000 ( loss on sale of building) + Increase in Cuorent liabilities Non operaing Gain (gain on sale of equiponent) Inercare in Cunent assers (Increase in accounts receivable) Decrease in Current liabiche (Decrease in income tax Payable) Cash flow foom operating activities : - Hence, it is clear from the above Calculation, thout the Cash flow from operating activities is 1550, cool 4,40,000 300,000 C 140,000 550,00 CS Scanned with CamScanner

SAT19 Calculation of cash flow from Investing achivities:- Inflows :- Sale of Investment in Rate motors ; P 350,00 outflows: Payment for acquisition of shares : P 260,00 of maybel Corporation Payment for acquisition of 4-year : P500,000 Certificate of Deposit Cach flow from Investing activities : p(410,000) * Interest paid and Collection of dividend is operating activities → Hence, cash flow from Investing achivities is negative (Pulo, cool. CS Scanned with CamScanner

SAT TO Calculation of Ealieliest Net cash flow from financing activities:- Inflows Proceeds from issuance of • P9,500,000 sharee Bowdwing under a line of : P9.coo,coo Credit Proceeds from issuance of · Pl,000, coo Convexhible boncus Outflows Diudend Paud P3,000, Cod Net cash flow from financing P 2,500,000 a chuifier * Proceeds from Sak of building core the part of inverting activities, therefore hot included in Calcubetion. – Hence, het Coth flow from financing actiones is P 2,500,000 CS Scanned with CamScanner