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NOTES TO FINANCIAL STATEMENTS

I. COMPANY PROFILE
Kit Kate Company Inc., is a corporation that started its business operations on January 5, 2015.
Founded by M. Kate Angeles, the company engages in buy and sell, ready to wear retail clothing. Their
main headquarters is located in #203 Pag-asa Street Maybunga, Pasig City. It also ships these ready-to-
wear clothes to various retail clients across Metro Manila. At present, the company is on its third year of
operations due to the high demand of affordable and stylish clothes catered to the Filipino millennial.

II. COMPLIANCE WITH PFRS STANDARDS

III. CASH AND CASH EQUIVALENTS

2017 2016 2015


Cash in Bank P725,550 P456,750 P620,100
Cash on Hand 205,000 198,500 187,500
Petty Cash Fund 58,500 50,550 49,950
Total Cash and Cash Equivalents P989,050 P705,800 P857,550

In 2016, the companys cash and cash equivalents declined due to _____________________.

IV. TRADE RECEIVABLES


The company makes use of the credit terms 2/15, n/30 and estimates its doubtful accounts at 5%
of the ending Trade Receivables.

2017 2016 2015


Trade Receivables P368,421 P347,368 P326,316
Less: Allowance for Doubtful Accounts 18,421 17,368 16,316
Trade Receivables, net P350,000 P330,000 P310,000

V. INVENTORIES
As a merchandising company, the company buys clothes from various suppliers across Metro
Manila, which in turn is used to sell to make revenue. The three primary retail products of the company
are: T-shirts, Pants, and Dresses.

2017 2016 2015


Inventory January 1, 2017 P290,000 P255,000 P205,000
Add: Net Purchases 7,675,000 7,060,000 6,250,000
Balance P7,965,000 P7,315,000 P6,455,000
Less: Cost of Sales 7,650,000 7,025,000 6,200,000
Inventory December 31, 2017 P315,000 P290,000 P255,000
VI. PREPAYMENTS

2017 2016 2015


Advertising P660,000 P880,000 P1,100,000
Supplies 225,000 340,000 425,000
Insurance 300,000 400,000 500,000
Total Prepayments P1,215,000 P1,620,000 P2,025,000

VII. NON-CURRENT ASSETS


Kit Kate Company Inc., makes use of a straight line depreciation method for its depreciable assets.
A. Furniture and Fixtures
2017 2016 2015
Cost P1,620,000 P1,240,000 P840,000
Less: Accumulated Depreciation 1,260,000 840,000 420,0000
Carrying Amount P360,000 P400,000 P420,000

The increase in the cost of the furniture and fixtures is attributed to the acquisition of furniture and
fixtures of P400,000 in 2016 and P380,000 in 2017.
B. Land
The land has not appreciated for the years 2015 to 2017 and the company has not estimated any appraisal
for the said asset.
C. Building
2017 2016 2015
Cost
Accumulated
Depreciation
Carrying Amount

VIII. CURRENT LIABILITIES


A. TRADE PAYABLES
IX. NON CURRENT LIABILITIES