Tutorial 14

Introductory Accounting
Teaching Assistant Team

PROBLEM 1
Canary Co. is a company that sells furniture. Below is Canary Co.’s income statement for the period
ended December 31, 2018.

Canary Co.
Income Statement
For the Year Ended December 31, 2018
Sales Revenue $28,350,000.00
Cost of Goods Sold
Beginning Inventory $8,457,000.00
Purchase 12,985,000.00
Cost of Goods Available for Sale 21,442,000.00
Ending Inventory (1,400,000.00)
Total Cost of Goods Sold (20,042,000.00)
Gross Profit 8,308,000.00
Operating Expense (2,150,000.00)
Net Income 6,158,000.00

Additional information related to Canary Co. in 2018:

1. Accounts receivable decreased $125,500 during the year.
2. Inventory increased $315,000 during the year.
3. Prepaid expenses increased $225,750 during the year.
4. Accounts payable decreased $112,560 during the year.
5. Accrued expenses payable decreased $100,000 during the year.
6. Operating expenses include depreciation expense of $312,000 during the year.
Instruction:
Prepare Statement of Cash Flows for Canary Co. for the period ended December 31, 2018 using
indirect method!

PROBLEM 2
Condensed financial data of PT ABC follow:
PT ABC
Statement of Financial Position
December 31
(in IDR 000)
2018 2017
Assets
Cash 100,350 48,400
Accounts receivable 92,800 33,000
Inventory 112,500 102,850
Prepaid expenses 29,300 26,000
Equipment 265,000 242,500
Accumulated depreciation – equipment (47,000) (52,000)
Long-term investments 140,000 114,000
Total 692,950 514,750

Liabilities and Equity

Accounts payable 112,000 67,300
Accrued expense payable 16,500 17,000
Bonds payable 110,000 150,000
Share capital – ordinary 220,000 175,000
Retained earnings 234,450 105,450
Total 692,950 514,750

PT ABC
Income Statement
For the year ended December 31, 2018
(in IDR 000)
Sales revenue 392,780
Cost of goods sold (135,460)
Gross profit 257,320

Operating expense, excluding depreciation (12,410)

Depreciation expense (45,000)
Interest expense (4,730)
Gain on disposal of plant assets 5,000
Income tax expense (27,280)
Net income 172,900

Additional information:
1. New equipment costing 80,000 was purchased for cash during the year.
2. Old equipment having an original cost of 57,500 and accumulated depreciation of 50,000 was
sold for 12,500 cash.
3. Bonds payable matured and were paid off at face value for cash.
4. A cash dividend of 43,900 was declared and paid during the year.

Instruction:
Prepare a statement of cash flows using the indirect method