Solution:
Cash Flow Statement (Direct Method) of Chemical Company
Notes:
1. Since Depreciation is a non-cash expense, it is not included in the statement of cash flows using the direct method. It will be included when using indirect method as we take net profit as base for calculating cash flows.
2. If Debtors are decreasing over the period which means cash has been collected from debtors over the period and hence cash received has to be added back to the cash sales.