Problem 3

Car Company reported net income of P5,000,000 for the current year and shown the following changes in several accounts:

Equipment P250,000 increase

Accumulated depreciation 400,000 increase

Note payable 300,000 increase

• During the year, the entity sold equipment costing P250,000, with accumulated depreciation of P120,000 at a gain of P50,000.
• In December, the entity purchased equipment costing P500,000 with P200,000 cash and 12% note payable of P300,000.

Required:

1. Compute for the depreciation expense for the current period (
2. Compute for net cash provided or used by operating activities
3. Compute for the net cash provided or used by investing activities