Name: Puray, Ma. Lorraine M . Instructor: Mr.

Wifredo Mondido, CPA

Course: BSA-1 Class Schedule: M-F (7:00-8:50 am)

WEEK 2 REQUIREMENT

PROBLEM 1
The financial position of FINMAN COMPANY at the end of 2017 and 2018 is as follows:

FINMAN COMPANY
Comparative Statement of Financial Position
As of the years ended December 31, 2017 and 2018

2017 2018

Current Assets:

Cash and Cash Equivalents 900,000 1,500,000

Accounts Receivable 300,000 500,000

Allowance for Doubtful Accounts - 30,000 - 50,000

Merchandise Inventory, Dec 31 200,000 250,000

Supplies Inventory 50,000 30,000

Prepaid Insurance 120,000 100,000

Prepaid Advertising 50,000 30,000

Total Current Assets 1,590,000 2,360,000

Noncurrent Assets:

Land 1,000,000 1,500,000

Building 1,500,000 1,500,000

Accumulated Dep – B - 210,000 - 280,000

Machinery & Equipment 600,000 800,000

 Accumulated Dep – M & E - 180,000 - 200,000

Total Noncurrent Assets 2,710,000 3,320,000

TOTAL ASSETS 4,300,000 5,680,000

Current Liabilities:

Accounts Payable 150,000 220,000

Accrued Salaries Expense 60,000 90,000

Accrued Taxes & Licenses 40,000 20,000

Total Current Liabilities 250,000 330,000

Noncurrent Liabilities:

Long-term Notes Payable 200,000 500,000

Mortgage Payable - 500,000

Bonds Payable 1,500,000 1,000,000

Total Noncurrent Liabilities 1,700,000 2,000,000

Total Liabilities 1,950,000 2,330,000

Shareholders’ Equity:

Common Stock, P100 par value 1,000,000 1,200,000

Preferred Stock, P500 par value 500,000 800,000

Share Premium 500,000 900,000

Retained Earnings, Dec. 31 350,000 450,000

Total Shareholders; Equity 2,350,000 3,350,000

TOTAL LIABILITIES & 4,300,000 5,680,000

SHAREHOLDERS’ EQUITY
Requirements:
1. Prepare a Comparative Statement of Financial Position showing peso and percentage changes for 2018 as
compared with 2017.
2. Prepare a Common-Size Statements of Financial Position as of December 31, 2017 and 2018.

Answers
REQUIREMENT#1
FINMAN COMPANY
Comparative Statement of Financial Position
As of the years ended December 31, 2017 and 2018
 Increase or Decrease
2017 2018 Amount Percentage
Current Assets
Cash and Cash Equivalents 900,000 1,500,00 600,000 66.67%
0
Accounts Receivable 300,000 500,000 200,000 66.67%
Allowance for doubtful account 30,000 50,000 20,000 66.67%
Merchandise Inventory, Dec. 31 200,000 250,000 50,000 25%
Supplies Inventory 50,000 30,000 -20,000 -40%
Prepaid Insurance 120,000 100,000 -20,000 -16.66%
Prepaid Advertising 50,000 30,000 -20,000 -40%
Total Currents Assets 1,590,000 2,360,00 770,000 48.43%
0

Non-Current Asset
Land 1,000,000 1,500,00 500,000 50%
0
Building 1,500,000 1,500,00 ---- N/A
0
Accumulated Dep'n - Building 210,000 280,000 70,000 33.33%
Machinery and Equipment 600,000 800,000 200,000 33.33%
Accumulated Dep'n – M & E 180,000 200,000 20,000 11.11%
Total Non-current Asset 2,710,00 3,320,00 610,000 22.51%
0

TOTAL ASSETS 4,300,000 5,680,00 1,380,000 32.09%

0

Current Liabilities
Accounts Payable 150,000 220,000 70,000 46.67%
Accrued Salaries Expense 60,000 90,000 30,000 50%
Accrued Taxes and Licenses 40,000 20,000 -20,000 -50%
Total Current Liabilities 250,000 330,000 80,000 32%

Non-current Liabilities:
Long-term Notes Payable 200,000 500,000 300,000 150%
Mortgage Payable 500,000 500,000 N/A
Bonds Payable 1,500,000 1,000,00 -500,000 33.33%
0
Total Non-current Liabilities 1,700,000 2,000,00 300,000 17.65%
0

TOTAL LIABILITIES 1,950,000 2,330,00 380,000 19.49%

0

Shareholders' Equity
Common Stock, $100 par value 1,000,000 1,200,00 200,000 20%
0
Preferred Stock, $500 par value 500,000 800,000 300,000 60%
Share Premium 500,000 900,000 400,000 80%
Retained Earnings, Dec. 31 350,000 450,000 100,000 28.57%
TOTAL SHAREHOLDERS' EQUITY 2,350,000 3,350,00 1,000,000 42.55%
0

TOTAL LIABILITIES & SHAREHOLDERS' 4,300,000 5,680,00 1,380,000 32.09%

EQUITY 0
REQUIREMENT#2

FINMAN COMPANY
Common-size Statement of Financial Position
As of the years ended December 31, 2017 and 2018

2017 2018

Current Assets
Cash and Cash Equivalents 900,000 20.93% 1,500,000 26.41%
Accounts Receivable 300,000 6.98% 500,000 8.80%
Allowance for doubtful account -30,000 -0.69% -50,000 0.88%
Merchandise Inventory, Dec. 31 200,000 4.65% 250,000 4.40%
Supplies Inventory 50,000 1.16% 30,000 0.52%
Prepaid Insurance 120,000 2.79% 100,000 1.76%
Prepaid Advertising 50,000 1.16% 30,000 0.53%
Total Currents Assets 1,590,000 36.98% 2,360,000 41.54%

Non-Current Asset
Land 1,000,000 23.25% 1,500,000 26.41%
Building 1,500,000 34.88% 1,500,000 26.41%
Accumulated Dep'n - Building 210,000 -4.88% -280,000 -4.93%
Machinery and Equipment 600,000 13.95% 800,000 14.09%
Accumulated Dep'n – M & E 180,000 -4.18% -200,000 -3.52%
Total Non-current Asset 2,710,00 63.02% 3,320,000 58.46%

TOTAL ASSETS 4,300,000 100% 5,680,000 100%

Current Liabilities
Accounts Payable 150,000 3.49% 220,000 3.88%
Accrued Salaries Expense 60,000 1.40% 90,000 1.58%
Accrued Taxes and Licenses 40,000 0.93% 20,000 0.35%
Total Current Liabilities 250,000 5.82% 330,000 5.81%

Non-current Liabilities:
Long-term Notes Payable 200,000 4.65% 500,000 8.80%
Mortgage Payable 500,000 8.80%
Bonds Payable 1,500,000 34.88% 1,000,000 17.61%
Total Non-current Liabilities 1,700,000 39.53% 2,000,000 35.21%

TOTAL LIABILITIES 1,950,000 45.35% 2,330,000 41.02%

Shareholders' Equity
Common Stock, $100 par value 1,000,000 23.25% 1,200,000 21.13%
Preferred Stock, $500 par value 500,000 11.63% 800,000 14.08%
Share Premium 500,000 11.63% 900,000 15.85%
Retained Earnings, Dec. 31 350,000 8.14% 450,000 7.92%
TOTAL SHAREHOLDERS' EQUITY 2,350,000 54.65% 3,350,000 58.98%

TOTAL LIABILITIES & SHAREHOLDERS' 4,300,000 100% 5,680,000 100%

EQUITY
PROBLEM 2
The operating activities of FINMAN COMPANY for the year ended December 31, 2017 and 2018 are summarized
below:

FINMAN COMPANY

Comparative Income Statement

For the years ended December 31, 2017 and 2018

2017 2018

Sales 1,000,000 1,500,000

Less: Sales Returns & Allowances - 60,000 - 80,000

Sales Discounts - 40,000 - 70,000

Net Sales 900,000 1,350,000

›Cost of Goods Sold:

200,000
Merchandise Inventory, Jan 1 150,000
Purchases 700,000
500,000
Freignt In 60,000 80,000

Purchase Returns & Allowance - 40,000 - 50,000

Purchase Discounts - 20,000 - 30,000

900,000
Total Goods Available for Sale 650,000
Less: Merchandise Inventory, Dec. 31 250,000
200,000
Cost of 450,000 650,000
Goods Sold

›Gross Profit 450,000 700,000

›Operating Expenses:

Supplies Expense 10,000 20,000

Freight Out 20,000 35,000

Salaries Expense 40,000 60,000

 Advertising Expense 10,000 20,000

Taxes & Licenses 20,000 25,000

Insurance Expense 20,000 20,000

Depreciation Expense-Building 70,000 70,000

60,000 80,000
Depreciation Expense-Mach & Eq
10,000 20,000
Doubtful Accounts Expense
Loss on Sale of Equipment - 40,000

Total Operating Expenses 260,000 390,000

›Operating Income 190,000 310,000

›Less: Finance Cost - Interest Expense 40,000 60,000

›NET INCOME (PROFIT) 150,000 250,000

Requirements:
1. Prepare a Comparative Income Statements showing peso and percentage changes for 2018 as compared with
2017.
2. Prepare a Common-Size Income Statement as of December 31, 2017 and 2018.

ANSWERS
REQUIREMENT #1
FINMAN COMPANY
COMPARATIVE INCOME STATEMENT
As of the years ended December 31, 2017 and 2018
 Increase or Decrease
2017 2018 Amount Percentage
Sales 1,000,000 1,500,00 500,000 50%
0
Less: Sales Return and Allowances 60,000 80,000 20,000 33.33%
Sales Discounts 40,000 70,000 30,000 75%
Net Sales 900,000 1,350,00 450,000 50%
0

Cost of Goods Sold

Merchandise Inventory, Jan 1 150,000 200,000 50,000 33.33%
Purchases 500,000 700,000 200,000 40%
Freight In 60,000 80,000 20,000 33.33%
Purchase Returns and Allowances -40,000 -50,000 -10,000 25%
Purchase Discounts -20,000 -30,000 -10,000 50%
TGAFS 650,000 900,000 250,000 38.46%
Less: Merchandise Inventory, Dec. 31 200,000 250,000 50,000 25%
Cost of Goods Sold 450,000 650,000 200,000 44.44%

Gross Profit 450,000 600,000 150,000 33.33%

Operating Expenses:
Supplies Expense 10,000 20,000 10,000 100%
Freight out 20,000 35,000 15,000 75%
Salaries Expense 40,000 60,000 20,000 50%
Advertising Expense 10,000 20,000 10,000 100%
Taxes and Licenses 20,000 25,000 5,000 25%
Insurance Expense 20,000 20,000 ----
Depreciation Expense- Building 70,000 70,000 ----
Depreciation Expense- M & E 60,000 80,000 20,000 33.33%
Doubtful Account Expense 10,000 20,000 10,000 100%
Loss on Sale of Equipment ---- 40,000 40,000
Total Operating Expense 260,000 390,000 130,000 50%

Operating Income 190,000 310,000 120,000 63.16%

Less-finance cost- Interest Expense 40,000 60,000 20,000 50%

NET INCOME ( PROFIT ) 150,000 250,000 100,000 66.67%

REQUIREMENT #2
FINMAN COMPANY
COMMON-SIZE INCOME STATEMENT
As of the years ended December 31, 2017 and 2018
 2017 2018

Sales 1,000,000 111.11% 1,500,00 111.11%

0
Less: Sales Return and Allowances 60,000 6.67% 80,000 5.92%
Sales Discounts 40,000 4.44% 70,000 5.19
Net Sales 900,000 100% 1,350,00 100%
0

Cost of Goods Sold

Merchandise Inventory, Jan 1 150,000 16.67% 200,000 14.81%
Purchases 500,000 55.56% 700,000 51.85%
Freight In 60,000 6.67% 80,000 5.93%
Purchase Returns and Allowances -40,000 4.44% -50,000 3.70%
Purchase Discounts -20,000 2.22% -30,000 2.22%
TGAFS 650,000 72.22% 900,000 66.67%
Less: Merchandise Inventory, Dec. 31 200,000 22.22% 250,000 18.51%
Cost of Goods Sold 450,000 50% 650,000 48.15%

Gross Profit 450,000 50% 600,000 44.44%

Operating Expenses:
Supplies Expense 10,000 1.11% 20,000 1.48%
Freight out 20,000 2.22% 35,000 2.59%
Salaries Expense 40,000 4.44% 60,000 4.44%
Advertising Expense 10,000 1.11% 20,000 1.48%
Taxes and Licenses 20,000 2.22% 25,000 1.85%
Insurance Expense 20,000 2.22% 20,000 1.48%
Depreciation Expense- Building 70,000 7.78% 70,000 5.19%
Depreciation Expense- M & E 60,000 6.68% 80,000 5.93%
Doubtful Account Expense 10,000 1.11% 20,000 1.48%
Loss on Sale of Equipment ---- 40,000 2.96%
Total Operating Expense 260,000 28.29% 390,000 28.89%

Operating Income 190,000 21.11% 310,000 22.96%

Less-finance cost- Interest Expense 40,000 4.44% 60,000 4.44%

NET INCOME ( PROFIT ) 150,000 16.67% 250,000 18.52%

PROBLEM 3
FINMAN CORPORATION’s net sales, profit, long-term debt, shareholders’ equity and total assets have been
reported as follows over the last five years:

Requirements: Express all the sales, current assets, and current liabilities on trend index and trend ratios.

1. Use 2014 as the base year.

2014 2015 2016 2017 2018

Sales 20,000,000 22,000,000 25,000,000 26,000,000 30,000,000

Trend Ratio 1.00 1.10 1.25 1.30 1.50
Trend Index 100 110 125 130 150
Profit 500,000 450,000 400,000 380,000 350,000
Trend Ratio 1.00 0.90 0.80 0.76 0.70
Trend Index 100 090 080 076 070

Shareholders Equity 20,000,000 21,000,000 22,000,000 20,000,000 19,000,000

Trend Ratio 1.00 1.05 1.10 1.00 0.95
Trend Index 100 105 110 100 095

Total Assets 34,000,000 33,200,000 38,400,000 35,000,000 30,800,000

Trend Ratio 1.00 0.98 1.13 1.03 0.91
Trend Index 100 098 113 103 091

2.Use 2018 as the base year.

2014 2015 2016 2017 2018

Sales 20,000,000 22,000,000 25,000,000 26,000,000 30,000,000

Trend Ratio 0.67 0.73 0.83 0.87 1.00
Trend Index 067 073 083 087 100

Profit 500,000 450,000 400,000 380,000 350,000

Trend Ratio 1.43 1.29 1.14 1.09 1.00
Trend Index 143 129 114 109 100

Shareholders Equity 20,000,000 21,000,000 22,000,000 20,000,000 19,000,000

Trend Ratio 1.05 1.11 1.16 1.05 1.00
Trend Index 105 111 116 105 100

Total Assets 34,000,000 33,200,000 38,400,000 35,000,000 30,800,000

Trend Ratio 1.10 1.08 1.25 1.14 1.00
Trend Index 110 108 125 114 100