JANJUA COMPANY

Junjua Company reported net income of Rs.160,000. For 2021, depreciation was Rs.40,000,
and the company reported a gain on disposal of investments of Rs.10,000. Accounts receivable
increased Rs.25,000 and accounts payable decreased Rs.20,000.
Instructions
Compute net cash provided by operating activities using the indirect method.

EMBA CORPORATION

A comparative statement of financial position for EMBA Corporation is presented below:

EMBA CORPORATION
Comparative statement of financial position
2021 2020
Assets
Land 18,000 40,000
Equipment 70,000 60,000
Accumulated depreciation (20,000) (13,000)
Prepaid insurance 25,000 17,000
Accounts receivable (net) 80,000 60,000
Cash 36,000 31,000
Total Assets Rs.209,000
Rs.195,000

Equity and Liabilities

Share capital-ordinary Rs.140,000 Rs.115,000
Retained earnings 31,000 55,000
Bonds payable 27,000 19,000
Accounts payable 11,000 6,000
Total equity and liabilities Rs.209,000 Rs.195,000

Additional information:
1. Net loss for 2021 is Rs.15,000.
2. Cash dividends of Rs.9,000 were declared and paid in 2021.
3. Land was sold for cash at a loss of Rs.7,000. This was the only land transaction during the
year.
4. Equipment with a cost of Rs.15,000 and accumulated depreciation of Rs.10,000 was sold
for Rs.5,000 cash.
5. Rs.12,000 of bonds were retired during the year at carrying (book) value.
6. Equipment was acquired for ordinary shares. The fair value of the shares at the time of the
exchange was Rs.25,000.

Instructions
Prepare a statement of cash flows for the year ended 2021, using the indirect method.
Junjua COMPANY

Net income Rs.160,000

Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation expense Rs.40,000
Gain on disposal of investments (10,000)
Increase in accounts receivable (25,000)
Decrease in accounts payable (20,000) (15,000)
Net cash provided by operating activities Rs.145,000
 EMBA CORPORATION
Statement of Cash Flows
For the Year Ended December 31, 2021
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Cash flows from operating activities
Net loss........................................................................................ Rs.(15,000)
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation (a) .................................................................. Rs.17,000
Loss on disposal of land (b) ................................................ 7,000
Increase in accounts receivable .......................................... (20,000)
Increase in prepaid insurance ............................................. (8,000)
Increase in accounts payable ............................................. 5,000 1,000
Net cash used by operating activities .................................. (14,000)
Cash flows from investing activities
Proceeds from the sale of land (b) ............................................... 15,000
Proceeds from the sale of equipment .......................................... 5,000
Net cash provided by investing activities ............................. 20,000
Cash flows from financing activities
Retirement of bonds payable ....................................................... (12,000)
Issuance of bonds payable .......................................................... 20,000
Payment of dividends .................................................................. (9,000)
Net cash used by financing activities .................................. (1,000)
Increase in cash ................................................................................... 5,000
Cash at beginning of period ................................................................. 31,000
Cash at end of period ........................................................................... Rs.36,000

Non-cash investing and financing activities

Purchase of equipment through issuance of ordinary shares ...... Rs.25,000

(a) Accumulated Depreciation 12/31/20 Rs.13,000

Accumulated Depreciation 12/31/21 20,000
Difference 7,000
Add: Accumulated depreciation on equipment sold 10,000
Depreciation expense Rs.17,000

(b) Cost of land sold Rs.22,000

Less: Loss on disposal of land (7,000)
Proceeds from sale of land Rs.15,000