PROBLEM NO.

3-CASH TO ACCRUAL

The income statement of Cagayan Corporation for 2010 included the following
items:

Interest income P2,101,000

Salaries expense 1,650,000
Insurance expense 277,200

The following balances have been excerpted from Cagayan Corporation’s

statements of financial position:

12/31/2009 12/31/2010
Accrued interest receivable P165,000 P200,200
Accrued salaries payable 92,400 195,800
Prepaid insurance 33,000 24,200

QUESTIONS:

Based on the above and the result of your audit, determine the following:

1. The cash received for the interest during 2010 was

a. P1,900,800 b. P2,101,000 c. P2,065,800 d. P2,136,200

2. The cash paid for salaries during 2010 was

a. P1,753,400 b. P1,557,600 c. P1,546,600 d. P1,845,800

3. The cash paid for insurance premiums during 2010 was

a. P253,000 b. P286,000 c. P244,200 d. P268,400

PROMLEM 11-5

Cash Flows from Operating, Investing, & Financing Activities

The worksheet below presents the comparative statements of financial position

items of NAMIBIA COMPANY at December 31, 2012 and 2011, with a column that
shows the increase (decrease) from 2011 to 2012:

INCREASE
2012 2011 (DECREASE)
Cash P4,037,500 P3,500,000 P537,500
Accounts receivable 5,640,000 5,840,000 (200,000)
Inventories 9,250,000 8,575,000 675,000
Property, plant, & equipment 16,535,000 14,835,000 1,700,000
Accumulated depreciation (5,825,000) (5,200,000) (625,0000
Investment in associate 1,525,000 1,375,000 150,000
Loan receivable 1,312,500 1,312,500
Total assets P32,475,000 P28,925,000 3,550,000

Accounts payable P5,075,000 P4,775,000 P300,000

Income taxes payable 150,000 250,000 (100,000)
Dividends payable 400,000 500,000 (100,000)
Liability under finance lease 2,000,000 2,000,000
Ordinary shares, P10 par 2,500,000 2,500,000
Share premium 7,500,000 7,5000
Retained earnings 14,850,000 13,400,000 1,450,000
Total liabilities and equity P32,475,000 P28,925,000 P3,550,000

Additional Information:

1. On December 31, 2011, Namibia acquired 25% of Orly Co.’s ordinary shares
for P1,375,000. On that date, the book value of Orly’s assets and
liabilities, which approximated their fair values, was P5,500,000. Orly
reported income of P600,000 for the year ended December shares during the
year.

2. During 2012, Namibia loaned P1,500,000 to Ariel Co., an unrelated company.

Ariel made the first semi-annual principal repayment of P187,500, plus
interest at 10%, on December 31,2012.

3. On January 2, 2012 Namibia sold equipment costing P300,000, with a

carrying amount of P175,000, for P200,000 cash.

4. On December 31, 2012, Namibia entered into a finance lease for an office
building. The present value of the annual rental payment is P2,000,000, which
equals the fair value of the building. Namibia made the first rental payment
of P300,000 when due on January 2,2013.

5. Net income for 2012 was P1,850,000

6. Namibia declared and paid cash dividends for 2012 and 2011 as follows:

Declared Paid Amount

2011 Dec. 15,2011 Feb. 20, 2012 P500,000
2012 Dec. 15, 2012 Feb. 20, 2013 400,000

Based on the preceding information, determine the following:

1. Net cash provided by the operating activities

a. P2,025,000 b. P 2,150,000 c.P2,175,000 d.P2,000,000

2. Net cash used in investing activities

a. P962,500 b. P1,300,000 c. P1,262,500 d. P1,112,500

3. Net cash used in financing activities

a. P500,000 b.350,000 c. P800,000 d. P900,000

PROBLEM 11-6

Cash Flows from Operating, Investing, & Financing Activities

The schedule below shows that account balances of LESOTHO CO. at the
beginning and end of the year December 31, 2012:

DEBITS Dec.31,2012 Dec. 31, 2011

Cash and cash equivalents P666,000 P150,000
Investments in trading securities 30,000 120,000
Accounts receivable 444,000 300,000
Inventories 873,000 900,000
Prepaid insurance 7,500 6,000
Land and Building 585,000 585,000
Equipment 933,000 510,000
Discount on bonds payable 25,500 27,000
Treasury shares 15,000 30,000
Cost of goods sold 1,617,000
Selling and general expenses 861,000
Income taxes 105,000
Unrealized loss on trading securities 12,000
Loss on sale of equipment 3,000
Total debits P6,177,000 P2,628,000

CREDITS
Allowance for bad debts P24,000 P15,000
Accumulated depreciation- Building 78,750 67,500
Accumulated depreciation- Equipment 137,250 82,500
Accounts payable 165,000 180,000
Notes payable-current 210,000 60,000
Accrued expense payable 54,000 26,100
Income tax payable 105,000 30,000
Unearned revenue 3,000 27,000
Notes payable-noncurrent 120,000 180,000
Bonds payable 750,000 750,000
Deferred tax liability 141,000 159,900
Ordinary shares, P10 par 1,078,200 600,000
Retained earnings appropriated for treasury 15,000 30,000
shares
Retained earnings appropriated for possible 114,000 69,000
building expansion
Unappropriated retained earnings 103,800 336,000
Share premium 348,000 15,000
Sales 2,694,000
Gain on sales of trading securities 36,000
Total credits P6,117,000 P2,628,000

Additional information:

a. All purchases and sales were on account.

b. Equipment with an original cost of P45,000 was sold for P21,000
c. Selling and general expense include the following:

Building depreciation P11,250

Equipment depreciation 75,750
Bad debt expense 9,000
Interest expense 54,000

d. A six-month note payable for P150,000was issued in connection with the

purchase of new equipment.
e. The noncurrent note payable requires the payment of P60,000 per year,
plus interest.
f. Treasury shares were sold for P3,000 more than their cost.
g. During the year, a 30% stock dividend was declared and issued. At that
time, there were 60,000 of P10 par ordinary shares outstanding.
 However, 600 of these shares were held as treasury shares at that time
and were prohibited from participating in the stock dividend. Market
value of ordinary shares was P50 per shares when the stock dividend was
declared.
h. Equipment was overhauled, extending its useful life, at a cost of
P18,000. The cost was debited to equipment.

Based on the given data, calculate the following:

1. Net income for 2012

a. P135,000 b. P150,900 c. P130,500 d. P132,000

2. Cash dividend declared and paid during 2012

a. P24,000 b. P156,000 c. P22,200 d. P0

3. Proceeds from the issuance of ordinary shares during the year

a. P300,000 b. P330,000 c. P630,000 d. P808,200

4. Proceeds from the sale of trading securities

a. P78,000 b. P114,000 c. P126,000 d. P42,000

5. Accumulated depreciation of old equipment

a. P21,000 b. P45,000 c. P24,000 d. P42,000

6. Cash paid for purchase of equipment

a. P150,000 b. P318,000 c. P450,000 d. P300,000

7. Proceeds from the sale of treasury shares

a. P18,000 b. P15,000 c. P12,000 d. P30,000

8. Net cash provided by the operating activities

a. P135,000 b. P261,000 c. P249,000 d. P276,900

9. Net cash used in investing activities

a. P318,000 b. P297,000 c. P183,000 d. P279,000

10. Net cash provided by the financing activities

a. P564,000 b. P561,000 c. P546,000 d. P318,000