Answers
1. A
Cash receipts
Cash received from customers
P 9,000,000
Dividend received
500,000
Interest received
200,000
P 9,700,000
Cash payments
Cash paid to suppliers and employees
P 6,000,000
Interest paid
400,000
Income taxes paid
300,000
Net cash provided by operating activities
P 6,700,000
P 3,000,000
2. B
Proceeds from sale of long term investments
P 2,000,000
Net cash provided by investing activities
P 2,000,000
3. C
Dividend paid
Proceeds from issuing share capital
Net cash provided by financing activities
P (1,000,000)
1,500,000
P 500,000
4. D
Cash balance January 1
P 1,800,000
Net cash provided by operating activities
P 3,000,000
Net cash provided by investing activities
P 2,000,000
Net cash provided by financing activities
P 500,000
Cash Balance on December 31
P 7,300,000
Answer
A.
Accumulated depreciation, January 1, 2020 = P5,280,000 (3/8) =
P1 980 000
Book value, January 1, 2020 = P5,280,000-P1,980,000 = P3,300,000
Depreciation,2020 = (P3,300,000- P480,000)/(6 – 3) =
P940 000
Accumulated depreciation, 31 December 2020
P2 920 000
The denominator of the 2020 depreciation calculation (6-3) is the new total useful life of six years, less the
three years for which the asset has been used as of January 1, 2020.
Answer
C.
FIFO inventory – January 1
Weighted average inventory – January 1
Increase in beginning inventory
P 7,100,000
7,700,000
P 600,000
Simple Company
Statement of Financial Position
December 31, 2020
Assets
Cash
P 420,000
Accounts receivable
500,000
Allowance for doubtful accounts
(50,000)
Notes receivable
150,000
Claim receivable
20,000
Land
1,500,000
Building
4,000,000
Machinery
2,000,000
Advances from customers
100,000
Accumulated depreciation-building
(1,600,000)
Accumulated depreciation-machinery
(1,300,000)
Financial assets at amortized cost
1,500,000
Factory supplies
50,000
Finished goods
400,000
Franchise
200,000
Goods in process
600,000
Prepaid insurance
20,000
Raw materials
200,000
Financial asset at fair value
250,000
Tools
40,000
Goodwill
(100,000)
Plant expansion fund
500,000
Total
P 9,400,000
Liabilities and Equity
Accounts payable
300,000
Notes payable
100,000
Income tax payable
60,000
Serial bonds payable (P50,000 due every July 1 of each year)
2,500,000
Employees income tax payable
20,000
Accrued interest on note payable
10,000
Accrued expense
30,000
Share Capital
5,000,000
Share premium
500,000
Retained earnings
880,000
Total
P 9,400,000