Demi Lovato Company provided the following comparative data and additional information:

2020 2019

Cash P 300,000 P 200,000

Accounts receivable, net 840,000 580,000

Merchandise inventory 660,000 420,000

Prepaid expenses 100,000 50,000

Long term investment 80,000 -

Property, plant and equipment 1,130,000 600,000

Accumulated depreciation 110,000 50,000

Accounts payable 530,000 440,000

Accrued expenses 140,000 130,000

Dividend payable 70,000 -

Note payable - long term debt 500,000 -

Share capital 1,200,000 900,000

Retained earnings 560,000 330,000

Net credit sales 6,400,000 4,000,000

Cost of goods sold 5,000,000 3,200,000

Expenses 1,000,000 520,000

Net income 400,000 280,000

All accounts receivable and accounts payable relate to trade merchandise.

Accounts payable are recorded net and always paid to take all of the discounts allowed.

The allowance for doubtful accounts at the end of 2020 was the same as at the end of 2019.

The proceeds from the note payable were used to finance a new store building.

Share capital was sold to provide additional working capital.

Required: Answer the following questions with proper solutions. The final answers should be highlighted and placed beside it is the letter of your choice that corresponds to the answer from your solution. (5 points each)

1. What is the amount of cash collections from customers in 2020?
2. 5,560,000
3. 5,580,000
4. 6,140,000
5. 6,400,000

2. What is the amount of cash payments to merchandise creditors in 2020?

1. 4,670,000
2. 4,910,000
3. 5,000,000
4. 5,150,000

3. What is the net cash provided by operating activities during the current year?

1. 400,000
2. 100,000
3. 200,000
4. 110,000

4. What is the net cash provided by financing activities during the current year?

1. 140,000
2. 300,000
3. 500,000
4. 700,000

5. What is the net cash used in investing activities during the current year?

1. 80,000
2. 530,000
3. 610,000
4. 660,000