Prepare Cash flows using indirect method and show the solution

1.22 Forest Company provided the following information for the preparation of a statement of cash flows for the current year: 2020 2019 Cash and cash equivalents 593,000 300,000 Trading securities 300,000 200,000 Accounts receivable, net of allowance 600,000 520,000 Inventory 900,000 840,000 Property, plant and equipment 2,000,000 2,100,000 Goodwill 200,000 200,000 Accounts payable 490,000 800,000 Accrued expenses 310,000 210,000 Bonds payable 800,000 1,000,000 Preference share capital, P100 par, each 400,000 500,000 share convertible into two ordinary shares Ordinary share capital, P20 par 820,000 700,000 Share premium 500,000 400,000 Retained earnings 1,273,000 550,000 Additional information: 1. Net income for the current year was P1 ,733,000. 2. Cash dividends paid during the year totaled P1 ,000,000. 3. The bonds mature on January 1, 2025. On December 31, 2020, bonds with face of P200,000 were retired at 105. 4. The entity sold 4,000 ordinary shares at P30 per share. 5. The decrease in preference share capital resulted from the exercise of the conversion privilege by preference shareholders. Required: Prepare the statement of cash ows for the current year. 1.21 Hill Company provided the following comparative statement of financial position: 2020 2019 Cash and cash equivalents 750,000 950,000 Accounts receivable 1,750,000 1, 100,000 Inventory 2,550,000 1,800,000 Prepaid expenses 100,000 150,000 Property, plant and equipment 5,300,000 4,300,000 Accumulated depreciation (1,150,000) (800,000) Accounts payable 1,250,000 1,000,000 Accrued expenses 50,000 200,000 Share capital 4,750,000 4,250,000 Retained earnings 3,250,000 2,050,000 Additional information The statement of retained earnings for 2020 showed net income of P1,500,000 and cash dividend paid of P300,000. During the year, the entity purchased equipment for cash and issued share capital for cash. Required: Prepare the statement of cash flows for 2020 using the indirect method