Problem #20

Preparation of the Financial Statements

Castor, Arenas, and Laurente, who are partners in the Super Manila Novelty Store, share profits in the ratio of 30:20:50.
The adjusted trial balance on Dec 31, 2018 follows:

Debits Credits
Cash P110000
Accounts Receivable 80000
Merchandise Inventory 800000
Prepaid Rent 20000
Prepaid Insurance 15000
Accounts Payable P50000
Notes Payable 115000
Castor, Capital 125000
Arenas, Capital 275000
Laurente, Capital 110000
Sales 2500000
Cost of Sales 1450000
Salaries Expense 450000
Rent Expense 200000
Insurance Expense 30000
Utilities Expense 20000
Totals P3175000 P3175000
Required:
1. Prepare the 2018 statement of comprehensive income. Show the division of profit at the lower portion of the
statement.
2. Prepare the statement of changes in partners’ equity for 2018. Assume the following additional information:
Capital Accounts, Investments Withdrawals
Jan 1, 2018 during during
the year the year
Castor P75000 P50000 -
Arenas 300000 25000 P50000
Laurente 150000 - 40000
3. Prepare the statement of financial position as at Dec 31, 2018.
 Super Manila Novelty Store
Partial Income Statement
For the Year Ended Dec 31, 2018
Profit P350000

Division of Profit (30:20:50):

Partner Castor P105000
Partner Arenas 70000
Partner Laurente 175000
P350000

Super Manila Novelty Store

Statement of Changes in Partners’ Equity
For the Year Ended Dec 31, 2018

Castor Arenas Laurente Total

Original Investments 75000.00 300000.00 150000.00 525000.00
Add: Additional Investments 50000.00 25000.00   75000.00
125000.0
Total 0 325000.00 150000.00 600000.00
Less: Permanent Withdrawals   -50000.00 -40000.00 -90000.00
125000.0
Balances 0 275000.00 110000.00 510000.00
105000.0
Add: Profit 0 70000.00 175000.00 350000.00
230000.0
Partners' Equity, Dec 31 0 345000.00 285000.00 860000.00

Super Manila Novelty Store

Statement of Financial Position
For the Year Ended Dec 31, 2018
Asset
Current Assets
Cash 110000
Accounts Receivable 80000
Merchandise Inventory 800000
Prepaid Rent 20000
Prepaid Insurance 15000
Total Assets P1025000
Liabilities
Current Liabilities
Accounts Payable 50000
Non-current Liabilities
Notes Payable 115000
Owner’s Equity
Castor, Capital 230000
Arenas, Capital 345000
Laurente, Capital 285000
Total Liabilities and Owner’s P102500
Equity 0