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The income statement of Kyonggi Inc. in Suwon, Korea, contains the following condensed information (currency unit in thousand Korean won, 000s): KYONGGI INC. Income Statement

The income statement of Kyonggi Inc. in Suwon, Korea, contains the following condensed information (currency unit in thousand Korean won, 000s):

KYONGGI INC.

Income Statement

Year Ended December 31, 2019

Sales 6,583,000

Cost of goods sold 3,427,000

Gross profit 3,156,000

Operating expenses 2,349,000

Profit from operations 807,000

Interest expense 124,000

Profit before income tax 683,000

Income tax expense 203,000

Profit 480,000

Kyonggi Inc. showed the following selected current asset and current liability balances on its year-on-year comparative statement of financial position on December 31, 2019:

2019 2018 Increase (Decrease)

Cash 150,000 30,000 120,000

Accounts receivable 775,000 610,000 165,000

Merchandise inventory 834,000 867,000 (33,000)

Accounts payable 521,000 501,000 20,000

Income tax payable 53,000 25,000 28,000

Additional information:

  1. The company uses a perpetual inventory system.
  2. Operating expenses include salaries expense of 1,000,000, depreciation expense of 300,000, amortization expense of 80,000, and a loss on the disposal of machinery of 24,000.
  3. Used machinery was sold for 270,000, at a loss of 24,000.
  4. New machinery was purchased during the year for 1,250,000. It was partially financed by a bank loan payable issued for 400,000.
  5. Dividends paid in 2019 totaled 100,000.

Instructions:

  1. Prepare the statement of cash flows using the indirect method. (40%)
  2. Prepare the statement of cash flows using the direct method. (40%)
  3. Identify the similarities and differences between your answers in parts A and B. (20%)

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