Assignment 3 Statement of Cash Flows

Instructions:
Read and study Module 3, then meet and discuss with your group
Deadline: February 16

1.) Activity 1: Analyze the transactions and complete the Cash Flow table (Be careful with your journal entries)

2.) From the journalized transactions

Activity 2: Prepare the Trial balance
3: Prepare the Statement of Financial Position (Report form)
4: Prepare the Statement of Comprehensive Income(One statement/function of expense method)
Note: Follow proper format

3.) Prepare the Statement of Cash Flows of Maria Printing Services for Jan. 2022
Activity 5 : Direct Method (complete with schedules)
6: Indirect Method (complete with schedules)

4.) Activity 7: Evaluate the company by computing for the following:

a. Cash Current Debt Coverage ratio
b. Cash Total Debt Coverage ratio
c. Cash Return on Sales
d. Cash Flow from Net Income
e. Free Cash Flow
f. Adequcy Ratio

Honor Pledge:
"We Accept responsibility for our role in ensuring the integrity of the work submitted by the group in which we parti

Attendance in the Conference: Date/Time: February 12, 2022, at 8:30-10:00 am

February 16, 2022, at 9:55-10:25am

Leader:
Members:
with your journal entries)

tion of expense method)

y the group in which we participated"

Activity 1: Transaction Analysis

INSTRUCTIONS:
1. Analyze and journalize the transaction.
2. Classify the transaction and the corresponding amounts as operating , investing or financing
- If the transaction is an inflow - input a positive amount
- If the transaction is an outlow - input a negative amount
- if the transaction has no effect - leave it blank
(The first transaction has been done for you.)

Scenario:
Maria is a newly licensed CPA, instead of being an employee, she opted to continue the Printing shop of his father.
She re-hired all their former employees which were laid-off due to the pandemic ,since they are now fully vaccinated.

The following are the transactions of Maria Printing Press for January 2022

TRANSACTION
January
1 Ms. Maria invested P 1,200,000 in the printing shop.

2 Paid for monthly business insurance P 4,000

3 Bought P 100,000 worth of printing supplies

4 Bought new Printing equipment from Fujitsu Phils.

amounting to P 400,000

5 Received P 100,000 cash for services rendered to

clients
6 Received Statement of Account from PLDT P 2,000;
Meralco P 10,000 and Manila Water P 800.

7 Paid salaries of employees P 50,000

8 Sent a Statement of Account to Mr. Juan amounting to

P 100,000 for printing services rendered

9 Received cash amounting to P 50,000 form Mr. Juan

as an initial payment of his account

10 Mr. Juan issued a 30-day, 10% promissory note to settle the

balance of his account

11 Paid PLDT and Manila Water

12 Secured a loan from MetBank in the amount of P 150,000

issuing a 5% 30-day promissory note.

13 Ms. Maria withdrew cash amounting to P 10,000 from the

business for her personal use.

14 Bought from Fujitsu a new computer set for P 50,000 on account

15 Ms. Maria made additional cash investment amounting to
P 200,000

16 Acquired a building for P 750,000, by signing a five (5) year mortgage

from a friend for 300,000 and the balance in cash

17 Made a monthy principal payment on the mortgage

29 Fully paid MetBank including interest

assumption: 360 days in a year; round-off to the nearest Peso

30 Received full payment from Mr. Juan including interest

assumption: 360 days in a year; round-off to the nearest Peso

31 Fully paid account with Fujitsu

Totals

Note: Do not tamper with the yellow boxes

nvesting or financing

o continue the Printing shop of his father.

ndemic ,since they are now fully vaccinated.

Journal Entry
Account Title DR CR

Cash 1,200,000
Maria, Capital 1,200,000
To record the initial investment of Maria.

Prepaid Insurance 4,000

Cash 4,000
To record monthly payment of business insurance.

Supplies 100,000
Cash 100,000
To record printing supplies bought.

Printing Equipment 400,000

Cash 400,000
To record printing equipment bought.

Cash 100,000
Service Revenue 100,000
To record received cash.
Utilities Expense 12,800
Utilities Payable 12,800
To record received statement of account.

Salaries Expense 50,000

Cash 50,000
To record salaries of employees.

Accounts Receivable 100,000

Service Revenue 100,000
To record printing services rendered.

Cash 50,000
Account Receivable 50,000
To record received cash.

Notes Receivable 50,000

Accounts Receivable 50,000

Utilities Payable 2,800

Cash 2,800
To record the utilities expense.

Cash 150,000
Notes Payable 150,000
To record the loan secured from Metbank.

Maria, Drawing 10,000

Cash 10,000
To record Ms. Maria drawings for personal use.

Computer Equipment 50,000

Accounts Payable 50,000
To record computer set bought.
Cash 200,000
Maria, Capital 200,000
To record additional cash investment.

Building 750,000
Cash 450,000
Mortgage Payable 300,000

Mortgage Payable 5,000

Cash 5,000

Notes Payable 150,000

Interest Expense 625
Cash 150,625

Cash 50,417
Interest Income 417
Notes Receivable 50,000

Accounts Payable 50,000

Cash 50,000

3,485,642 3,485,642
 INFLOW/ (OUTFLOW)
OPERATING INVESTING FINANCING

1,200,000

(4,000)

(100,000)

(400,000)

100,000
(50,000)

50,000

(2,800)

150,000

(10,000)
 200,000

(750,000)

(5,000)

150,000
(625)

417
50,000

(50,000)

42,992 (1,200,000) 1,685,000 527,992.00 NET CASH FLOW

Activity 2: Trial Balance
Marian Printing Press JAN
Unadjusted Trial Balance 1
January, 2022 2
3
Debit Credit 4
Cash ₱527,992.00 5
Accounts Receivable - 7
Notes Receivable - 9
Prepaid Insurance 4,000.00 11
Supplies 100,000.00 12
Printing Equipment 400,000.00 13
Computer Equipment 50,000.00 15
Building 750,000.00 16
Utilities Payable ₱10,000.00 17
Notes Payable - 29
Accounts Payable - 30
Mortgage Payable 295,000.00 31
Maria, Capital 1,400,000.00
Maria, Drawing 10,000.00
Service Revenue 200,000.00
Interest Income 417.00 JAN
Salaries Expense 50,000.00 8
Utilities Expense 12,800.00 9
Interest Expense 625.00 10
Totals ₱1,905,417.00 ₱1,905,417.00

JAN
10
30
JAN
2

JAN
3

JAN
4

JAN
14

JAN
16
 CASH JAN UTILITIES PAYABLE
1,200,000 6 12,800
4,000 11 2,800
100,000 2,800 12,800
400,000 10,000
100,000
50,000 JAN NOTES PAYABLE
50,000 6 150,000
2,800 11 150,000
150,000 150000 150,000
10,000 -
200,000
450,000 JAN ACCOUNTS PAYABLE
5,000 14 50,000
150,625 31 50,000
50,417 50,000 50,000
50,000 -
1,750,417 1,222,425
527,992 JAN MORTGAGE PAYABLE
16 300,000
ACCOUNTS RECEIVABLE 17 5,000
100,000 5,000 300,000
50,000 295,000
50,000
100,000 100,000 JAN CAPITAL
- 1 1,200,000
15 200,000
NOTES RECEIVABLE 1,400,000
50,000
50,000 JAN DRAWINGS
50,000 50,000 13 10,000
- 10,000
 PREPAID INSURANCE JAN SERVICE REVENUE
4,000 5 100,000
4,000 8 100,000
200,000
SUPPLIES
100,000 JAN INTEREST INCOME
100,000 30 417
417
EQUIPMENT - PRINTING
400,000 JAN SALARIES EXPENSE
400,000 7 50,000
50,000
EQUIPMENT - COMPUTER
50,000 JAN UTILITIES EXPENSE
50,000 6 12,800
12,800
BUILDING
750,000 JAN INTEREST EXPENSE
750,000 29 625
625
Activity 3: Statement of Financial Position

Maria Printing Press

Statement of Financial Position
January 2022

Assets
Current Assets
Cash ₱527,992.00
Prepaid Expense (Note 1) 104,000.00 631,992.00
Noncurrent Assets
Property, Plant and Equipment (Note 2) 1,200,000.00
TOTAL ASSETS ₱1,831,992.00

Liabilities and Shareholder's Equity

Current Liabilities
Utilities Payable 10,000.00
Noncurrent Liabilties
Mortgage Payable 295,000.00

Shareholder's Equity
Maria, Capital ₱1,400,000.00
Maria, Drawing (10,000.00)
Total 1,390,000.00
Net Profit 136,992.00
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY ₱1,831,992.00

Note 1- Prepaid Expenses

Supplies ₱100,000.00
Prepaid Insurance 4,000.00
Total ₱104,000.00
Note 2- Property, Plant and Equipment
Printing Equipment ₱400,000.00
Computer Equipment 50,000.00
Building 750,000.00
Total ₱1,200,000.00
Activity 4: Statement of Comprehensive Income

Maria Printing Press

Statement of Comprehensive Income
January 2022
Revenue ₱200,000.00
Cost of Sales -
Gross Profit 200,000.00
Other Income (Note 3) 417.00
Total Income 200,417.00

Expenses
Distribution Cost -
Administrative Expense (Note 4) (62,800.00)
Other Expense -
Finance Cost (Note 5) (625.00)
Profit before tax 136,992.00
Income Tax Expense -
Profit for the year from continuing operations -
Loss for the year from discontinued operations -
PROFIT FOR THE YEAR ₱136,992.00

Note 3- Other Income

Interest Income ₱417.00

Note 4- Administrative Expense

Utilities Expense ₱12,800.00
Salaries Expense 50,000
₱62,800.00
Note 5- Finance Cost
Interest Expense ₱625.00
Activity 5: Statement of Cash Flows- Direct Method

Maria Printing Press

Statement of Cash Flows
Jan 2022

Cash Flow from Operating Activities

Cash Receipt for:
Cash Receipt from Customers ₱200,000.00
Cash Receipt from Interest Income 417.00
Cash Payment for:
Supplies -100,000.00
Salaries -50,000.00
Insurance -4,000.00
Utilities -2,800.00
Interest -625.00 157,425.00
Net Cash from Operating Activities 42,992.00

Cash Flow from Investing Activities

Cash payment for Acquisition (Building) -450,000.00
Cash payment for Acquisition (Printing Equipment) -400,000.00
Cash payment for Acquisition (Computer) -50,000.00
Net Cash from Investing Activities -900,000.00

Cash Flow from

Cash receipts Investing
from owner Activities
Cash receipt from short-term loan 1,400,000.00
Cash payment to owner (drawing) 150,000.00
-10,000.00
Cash
Cash repayment for short-term
repayment for mortgage payable
loan -5,000.00
Net cash from financing activities -150,000.00
1,385,000.00

Net increase in cash and cash equivalents 527,992.00

Cash and cash equivalents, beginning
0.00
Cash and cash equivalents, end
₱527,992.00
Activity 6: Statement of Cash Flows-Indirect Method

Maria Printing Press

Statement of Cash Flows
Jan 2022

Cash flows from operating activities

Profit before tax 136,992.00
Adjustments to reconcile net income to net cash:
Increase in supplies -100,000.00
Increase in insurance -4,000.00
Increase in utilities payable 10,000.00
Net cash from operating activities 42,992.00

Cash flow from investing activities

Cash payment for acquisition of printing equipment -400,000.00
Cash payment for acquisition of computer -50,000.00
Cash payment for acquisition of building -450,000.00
Net cash used in investing activities -900,000.00

Cash flow from financing activities

Cash receipt from owner 1,400,000.00
Cash receipt from short-term loan 150,000.00
Cash payment to owner (drawing) -10,000.00
Cash repayment for mortgage payable -5,000.00
Cash repayment for short-term loan -150,000.00
Net cash from financing activities 1,385,000.00

Net increase in cash and cash equivalents 527,992.00

Cash and cash equivalents, beginning 0

Cash and cash equivalents, end ₱527,992.00

Activity 7: Evaluate the Company

a. Cash Current Debt Coverage ratio Interpretations:

Cash provided by operating activities 42,992 The entity's cash current debt coverage ratio indicates high liquidi
Divided by: Average Current Liabilities 10,000 since its operating activites generate enough cash flow.
4.3

b. Cash Total Debt Civerage ratio Interpretations:

Cash provided by operating activities 42,992 A good cash total debt coverage ratio is above 1, however, conside
Divided by: Average Total Liabilities 305,000 it's understandable that it has a low cash cash total debt coverage
0.14

c. Cash Return on Sales

Cash provided by operating activities 42,992
Divided by: Net Sales 200,000
0.21

d. Cash Flow from Net Income

Cash flow from operating activities
Divided by: Net Income 136,992
0.31

e. Free Cash Flow Interpretations:

Cash from operating activities 43,124 Negative free cash flow indicates an inability to generate sufficient
Less: Dividend payments and Acquisition of Equipment 450,000 Free cash flow represents the residual cash left over after an organ
-406,876

f. Adequacy Ratio Interpretations:

Cash from operating activities 43,124 An adequacy ratio lower than 1 signifies that the business does no
Divided by: Dividend payments and Acquisition of Equipment 450,000 to sustain itself without acquiring additional debt or equity financi
0.1
ratio indicates high liquidity. This means that the business can clear its current liabilities on time
ough cash flow.

above 1, however, considering that the business just started generating cash flow,
h cash total debt coverage ratio.

bility to generate sufficient cash for the business's needs.

ash left over after an organization meets all its operating expenses.

that the business does not generate sufficient cash flow

onal debt or equity financing.