FINANCIAL ACCOUNTING AND REPORTING 3

ANSWER WITH COMPLETE SOLUTION PLEASE

38. Cotton Corp. reported net income of P420,000 for 2015. Changes occurred in several balance sheet accounts as follows: Equipment............................................................ P 35,000 increase Accumulated depreciation ............................... 56,000 increase Note payable ...................................................... 42,000 increase Additional information: During 2015, Cotton sold equipment costing P35,000, with accumulated depreciation of P16,800, for a gain of P7,000. In December 2015, Cotton purchased equipment costing P70,000 with P28,000 cash and a 12% note payable of P42,000. Depreciation expense for the year was P72,800. In Cotton's 2015 statement of cash flows, net cash used in investing activities should be a. P2,800 b. P16,800 c. P30,800 d. P49,000 39. The following information was taken from the 2015 financial statements of Winchester Corporation: Accounts receivable, January 1, 2015......... P 108,000 Accounts receivable, December 31, 2015.. 152,000 Sales on account and cash sales................. 2,190,000 Uncollectible accounts ................................. 5,000 No accounts receivable were written off or recovered during the year. If Winchester prepares a statement of cash flows using the direct method, what amount should be reported as collected from customers in 2015? a. P2,239,000 b. P2,234,000 c. P2,146,000 d. P2,141,000 40. Rose Corporation reported net income of P420,000 for 2015. Changes occurred in several balance sheet accounts as follows: Equipment ...................................................... P 35,000 increase Accumulated depreciation.......................... 56,000 increase Note payable................................................. 42,000 increase Additional information: During 2015, Rose sold equipment costing P35,000, with accumulated depreciation of P16,800, for a gain of P7,000. In December 2015, Rose purchased equipment costing P70,000 with P28,000 cash and a 12% note payable of P42,000. Depreciation expense for the year was P72,800. In Rose's 2015 statement of cash flows, net cash provided by operating activities should b a. P476,000 b. P485,800 c. P492,800 d. P499,800