Relevant data for three different companies follows:

The following is a list of items to be included in the preparation of the 2021 statement of cash
flows
from the Rayson Company. Gain on retirement of bonds, P92,000; Increase in inventory,
P67,000;
Proceeds from sale of investment, P85,000; Proceeds from issuance of note, P250,000;
Depreciation
expense, P107,000; Decrease in accounts receivable, P50,000; Payment for purchase of
patent,
P198,000; Decrease in accounts payable, P40,000; Payment of dividends, P300,000; Net profit,
P554,000; Ordinary share exchanged for land, P140,000; Payment to retire bonds, P370,000;
Payment
for purchase of equipment, P394,000; Loss on sale of investments, P48,000; Repurchase of
treasury
shares, P120,000; Proceeds from issue of preference shares, P528,000; Amortization of
discount on
debt securities at amortized cost, P15,000.
On January 1, 2015, Sheila Company established a sinking fund to retire bonds payable due in
2025.
A bank was appointed as an independent trustee to manage the fund investment. On December
31,
2021, the trustee held P3,900,000 cash and P1,600,000 of securities in the sinking fund
account. The
cash amount of P3,900,000 represents P3,700,000 in annual deposits to the fund and P200,000
of
investment income earned in those deposits prior to 2021. A bank representative informed
Sheila that
P80,000 of interest and dividends has been earned in 2021; however, this amount will be
received in
the first month of 2022.
On September 30, 2021, Belfast Company issued face value, 5-year bonds at 102. Each
P1,000 bond
was issued with 20 detachable share warrants, each of which entitled the bondholder to
purchase one
share of P5 par ordinary share at P25. At time of issuance, there was no available market value
for the
warrant The stated interest rate on the bonds is 11% payable annually every September 30.
However,
the prevailing market rate of interest for similar bonds without warrants is 12%. The present
value of
1 at 12% for 5 periods is 0.57 and the present value pf an ordinary annuity of 1 at 12% for 5
periods is
3.60. Belfast Company's accounting year ends on December 31.
On December 31, 2021, IBM Company had outstanding P20 million face value convertible
bonds
maturing on December 31,2019. Each P1,000 bond is convertible into 60 shares of IBM
Company's
P10 par ordinary shares. The unamortized premium balance and Bond Conversion Privilege is
P350,000 and P640,000, respectively. On this date, an individual holding 2,000 of the bonds
exercised the conversion privilege When the market value of IBM Company's ordinary share
was
P18.
38. How much is the net cash flow from operating activities of Rayson Company during 2021?
a. P575,000
b. P560,000
c. P554,000
d. P545,000
Net profit P554,000
Gain on retirement of bonds (92,000)
Increase in inventory (67,000)
Depreciation expense 107,000
Decrease in accounts receivable 50,000
Decrease in accounts payable (40,000)
Loss on sale of investments 48,000
Amortization of discount on debt securities at amortized cost (15,000)
Net cash flow from operating activities P545,000