Problem 1: (No.

1)
Mamba Company’s income statement for the year ended December 31, 2016, reported net income of
P478,800. In preparing the statement of cash flows, the accountant noted the following transactions
during 2016 that might affect cash flow from operating activities:

 Mamba purchased 300 treasury shares at a cost of P20 per share. These shares were then resold
at P25 per share.

 Mamba sold 300 of Shaquille ordinary shares at P200 per share. The fair value of these shares
was P145 per share at December 31, 2015.

 Mamba changed from the straight-line method to the double declining balance method of
depreciation for its machinery. The cumulative effect was P43,800.

 Mamba revised its estimate for bad debts. Prior to 2016, Mamba’s bad debt expense was 1% of
its net sales. In 2016, this rate was increased to 2%. Net sales for 2016 were P1,500,000, and net
accounts receivable decreased by P36,000 during 2016.

 Mamba issued 1,500 shares of its P10 par ordinary shares for a patent. The ordinary shares had
a market value of P23 per share on the transaction date.

 Depreciation expense amounted to P117,000.

 Mamba holds 40% of the Lakers Corp.’s ordinary shares as a long-term investment. Lakers Corp.
reported net income of P81,000 for 2016.

 Lakers Corp. paid a total cash dividend of P6,000 to all investees in 2016.

 Mamba declared a 10% stock dividend. Three thousand of P10 par ordinary shares were
distributed. The market price on the date of declaration of the stock dividend was P20 per
share.

1.What is the amount of net cash provided by operating activities?

A. 585,300 C. 555,300
B. 586,800 D. 587,700

Problem 2: (No.2 to 6)
Kobe Company uses the direct method to prepare its statement of cash flows. Kobe’s trial balances at
December 31, 2016 and 2015, are shown below:

December 31
DEBITS 2016 2015
Cash 105,000 96,000
Accounts Receivable 99,000 90,000
Inventory 93,000 141,000
Property, Plant and Equipment 300,000 285,000
Unamortized bond discount 13,500 15,000
 Cost of goods sold 750,000 1,140,000
Selling expenses 424,500 516,000
General and administrative expenses 411,000 453,900
Interest expense 12,900 7,800
Income tax expense 61,200 183,600
TOTAL 2,270,100 2,928,300

CREDITS 2016 2015

Allowance for bad debts 3,900 3,300
Accumulated Depreciation 49,500 45,000
Accounts payable – trade 75,000 46,500
Income taxes payable 63,000 87,300
Deferred income taxes payable 15,900 13,800
8% Bonds payable 135,000 60,000
Ordinary share capital 150,000 120,000
Share premium 27,300 22,500
Retained earnings 134,100 193,800
Sales 1,616,400 2,336,100
TOTAL 2,270,100 2,928,300

Additional data are as follows:

1. Kobe purchased P15,000 in equipment during 2016.
2. One-third of Kobe’s depreciation expense is allocated to selling expenses and the remainder to
general and administrative expenses.
3. Bad debt expense for 2016 was P15,000. During the year, uncollectible accounts totaling P14,400
were written off. The company reports bad debts as selling expense.

Required:
Based on the preceding data, determine the amounts that should be reported on Kobe’s statement of
cash flows for the year ended, December 31, 2016, for the following:
2. Cash collected from customers
A. 1,593,000 C. 1,607,000
B. 1,578,000 D. 1,639,800

3. Cash paid to suppliers

A. 769,500 C. 673,500
B. 826,500 D. 730,500

4. Cash paid for interest

A. 14,400 C. 600
B. 22,200 D. 11,400

5. Cash paid for income taxes

A. 39,000 C. 87,400
B. 83,400 D. 34,800

6. Cash paid for selling expenses

A. 408,000 C. 405,000
B. 423,000 D. 409,500

Problem 3: (No.7 to 9)
Weaver Company provided the following data:
December 31, 2012 December 31, 2013
Trade accounts receivable, net 840,000 780,000
Inventory 1,500,000 1,400,000
Accounts payable 950,000 980,000

*Total sales were P12,000,000 for 2013 and P11,000,000 for 2012. Cash sales were 20% of total sales
each year. Cost of goods sold was P8,400,000 for 2013.
*Variable general and administrative expenses for 2013 were P1,200,000. They have varied in
proportion to sales, 50% have been paid in the year incurred and 50% the following year. Unpaid
expenses are not included in accounts payable.
*Fixed expenses, including P350,000 depreciation and P50,000 bad debt expense, totaled P1,000,000
each year. Eighty percent of fixed expenses involving cash were paid in the year incurred and 20% the
following year. Each year there was a P50,000 bad debt estimate and a P50,000 write-off unpaid
expenses are not included in accounts payable.

7. What is the cash collected from customers during 2013?

a. 12,010,000 c. 11,960,000
b. 12,060,000 d. 11,890,000

8. What is the cash disbursed for purchases during 2013?

a. 8,500,000 c. 8,300,000
b. 8,270,000 d. 8,200,000

9. What is the cash disbursed for expenses during 2013?

a. 1,800,000 c. 1,750,000
b. 1,200,000 d. 1,450,000

Problem 4: (No.10 to 12)

Simplex Company provided the following comparative statement of financial position:
2013 2012
Cash 2,300,000 1,500,000
Accounts receivable 1,150,000 1,200,000
Inventory 2,000,000 1,800,000
Property, plant and equipment 6,400,000 3,000,000
Accumulated depreciation (1,150,000) (1,000,000)
Investment in Belle Company 3,200,000 3,000,000
Loan receivable 800,000 -
Accounts payable 1,000,000 900,000
Income tax payable 50,000 250,000
Dividend payable 1,000,000 1,500,000
Finance lease liability 3,800,000 -
Ordinary share capital 5,000,000 5,000,000
Share premium 500,000 500,000
Retained Earnings 3,350,000 1,350,000

*Net income for 2013 was P3,000,000.

*On December 31, 2012, Simplex acquired 25% of Belle Company’s ordinary shares for P3,000,000. Belle
reported net income of 1,200,000 for 2013. Belle paid cash dividend of P400,000 on ordinary shares for
the current year.
*During 2013, Simplex loaned P1,000,000 to Chase Company, an unrelated entity. Chase made the first
semiannual principal repayment of P200,000, plus interest of 10%, on October 1, 2013. No accrual of
interest was made on December 31, 2013.
*On January 1, 2013, Simplex sold equipment costing P600,000, with a carrying amount of P350,000 for
P400,000 cash.
*On January 1, 2013, Simplex entered into a finance lease for an office building. The present value of the
annual rental payments is P4,000,000, which equals the fair value of the building. Simplex made the first
rental payment of P600,000 when due on December 31, 2013. The payment includes an implicit interest
of P400,000.
*Simplex declared cash dividend in one year and paid the dividend in subsequent year.

10. What is the net cash provided by operating activities?

a. 2,800,000 c. 2,600,000
b. 2,900,000 d. 2,850,000

11. What is the net cash used in investing activities?

a. 500,000 c. 600,000
b. 300,000 d. 400,000

12. What is the net cash used in financing activities?

a. 2,100,000 c. 1,200,000
b. 1,600,000 d. 1,700,000