You are auditing for the first time financial statements of GHI Corporation who has been using the cash basis of accounting. The following schedule was prepared by the company's accountant:

Schedule of Cash Receipts and Disbursements

For the Year Ended December 31, 2020

Cash Receipts:

From customers 1, 230, 000

From a bank as proceeds of a 12% loan, January 2 500, 000

From sale of equipment 30, 000 1,760,000

Cash disbursements:

To suppliers of inventories 450, 000

For various operating expenses 340, 000

To supplier of equipment 200, 000

To stockholders as dividends is 50, 000

To the bank for interest due December 31 60, 000 1, 100, 000

Increase in cash for the period 660, 000

Cash, beginning balance 850, 000

Cash, ending balance 1, 510, 000

Audit notes:

a. Uncollected sales invoices to customers amounted to P125, 000 at the beginning of the year while the outstanding sales invoices to customers at the end of the year was P250, 000. 5% of the outstanding receivables at the end of the year was doubtful of collection. Total discount taken by customers during the year was at P36, 000 while credit memos issued for customer returns amounted to P59, 000.

b. Open purchase invoice file at the beginning of the year amounted to P90, 000 while unpaid purchase invoices at the end of the year totaled P115, 000. Cash discounts taken on purchases amounted to P45, 000 while credit memos received for purchase returns was P70, 000.

c. Inventories records show that inventories at the beginning and at the end of the year were P120, 000 and P150, 000, respectively.

d. Accruals and prepayments of operating expenses at the beginning and at the end of the year were as follows:

Beginning Ending

Prepaid Advertising P12, 000 P15, 000

Prepaid Rent 5, 000 7, 000

Accrued Salaries 20, 000 16, 000

e. The carrying value of the equipment sold at the beginning of the year was at P50, 000. The replacement equipment acquired at the beginning of the year was estimated to have a 10-year useful life without salvage value.

f. Advance payments received from customers were P7,000 and P8,000 at the beginning and at the end of the year, respectively. Advance payments made to suppliers of inventories at the end of the year was P14, 000.

Assuming that you have to convert the company records to accrual basis of accounting, determine the following under the accrual basis of accounting:

6. Gross sales

a. 1, 354, 000

b. 1, 413, 000

c. 1, 450, 000

d. 1, 449, 000

7. Gross Purchases

a. 590, 000

b. 576, 000

c. 461, 000

d. 596, 000

8. Cost of sales

a. 431, 000

b. 350, 000

c. 406, 000

d. 426, 000

9. Gross Profit

a. 1, 154, 000

b. 1, 023, 000

c. 1, 003, 000

d. 923, 000

10. Total operating expenses (excluding interest expenses)

a. 363, 500

b. 350, 000

c. 331, 000

d. 381,500

11. Net income

a. 559, 500

b. 539, 500

c. 499, 500

d. 479, 500

11. Net income

a. 559, 500

b. 539, 500

c. 499, 500

d. 479, 500

12. Total Current Assets

a. 1, 919, 500

b. 1., 932, 000

c. 1, 933, 500

d. 1, 937, 000