Reference no: EM132812347
Gerald Company had the following account balances for 2021.
December 31 January 1
Accounts payable 500,000 650,000
Inventory 300,000 250,000
Accounts receivable 800,000 900,000
Prepaid expenses 400,000 600,000
- All sales and purchases of inventory were on account.
- Depreciation expense of P900,000 was recognized during 2021.
- Equipment was sold during 2021 and a gain of P300,000 was recognized.
The entity provided the following cash flow information for 2021:
Cash collected from customers 9,500,000
Cash paid to suppliers 4,100,000
Cash paid for other expenses 1,400,000
Problem 1: What is the net income under accrual basis?
A. 4,000,000
B. 3,000,000
C. 3,900,000
D. 3,300,000
Problem 2: What is the net income under cash basis?
A. 4,050,000
B. 3,400,000
C. 4,000,000
D. 3,450,000
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