PAMANTASAN NG LUNGSOD NG VALENZUELA

College of Accountancy

Financial Accounting and Reporting I (FAR I)

Hand out 005 – Preparation of Financial Statements

After several years of experience in auditing practice, Joel started its own business under the name Joel
Wanagen, CPA. His business was started at January 1, 2016 with an initial investment of cash of
P923,500. During the beginning of the year the following fixed assets were acquired:

Land P 75,000
Building P 750,000
Office Equipment P 362,500

Due to cash fall short during the year, Joel made additional investments amounting to P127,000 to
support the operations.

After 1 year of operation the following data were extracted from the adjusted trial balance and submitted
to you for the preparation of financial statements:

Accounts Payable 63,500

Accounts Receivable 198,000
Accumulated Depreciation – Building 55,000
Accumulated Depreciation - Office Equipment 60,000
Auditing Revenues 1,361,500
Building 750,000
Cash 118,500
Depreciation Expense – Building 55,000
Depreciation Expense - Office Equipment 60,000
Wanagen, Capital, 1/1/2016 923,500
Wanagen, Withdrawal 165,000
Land 75,000
Notes Receivable 60,000
Office Equipment 362,500
Office Supplies Expense 96,000
Interest Income 20,000
Office Supplies 28,000
Professional Development Expense 86,500
Rent Expense 52,500
Salaries Expense 735,000
Salaries Payable 30,500
Travel Expense 41,000
Utilities Expense 18,000
Unearned Auditing Revenues 350,000
Representation Expense 80,000
Transportation Expense 10,000
 JOEL WANAGEN, CPA
INCOME STATEMENT
For the Year Ended December 31, 2016

INCOME
Auditing Revenues P
Interest Income
Total Income P

EXPENSES
Depreciation Expense – Building P
Depreciation Expense - Office Equipment
Office Supplies Expense
Professional Development Expense
Rent Expense
Salaries Expense
Travel Expense
Utilities Expense
Representation Expense
Transportation Expense

NET INCOME P
 JOEL WANAGEN, CPA
STATEMENT OF CHANGES IN OWNER'S EQUITY
For the Year Ended December 31, 2016

Wanagen, Capital 1/1/2016 (INITIAL INVESTMENT) P

Add: Additional Investments
Total P
Less: Withdrawal
Balance P
Net Income
Wanagen, Capital 12/31/2016 P
 JOEL WANAGEN, CPA
STATEMENT OF FINANCIAL POSITION
As of December 31, 2016

ASSETS

Current Assets
Cash P
Accounts Receivable
Notes Receivable
Office Supplies
Total Current Assets P

Noncurrent Assets
Land P
Building P
Accumulated Depreciation - Building
Office Equipment P
Accumulated Depreciation - Office Equipment
Total Noncurrent Assets
TOTAL ASSETS P

LIABILITIES AND OWNER'S EQUITY

Liabilities
Accounts Payable P
Salaries Payable
Unearned Auditing Revenues
Total Liabilities P

Owner's Equity
Wanagen, Capital 12/31/2016
TOTAL LIABILITIES AND OWNER'S EQUITY P
 JOEL WANAGEN, CPA
STATEMENT OF CASH FLOWS
For the Year Ended December 31, 2016

OPERATING ACTIVITIES
Net Income P
Add: Depreciation Expense - Building
Depreciation Expense - Office Equipment
Operating Income before working Capital Changes P
Working Capital Changes:
(Increase) Decrease in Current Assets
Increase in Accounts Receivables
Increase on Notes Receivable
Increase Office Supplies
Increase (Decrease) in Current Liabilities
Accounts Payable
Salaries Payable
Unearned Auditing Revenues
Cash provided from (used in) Operating Activities P

INVESTING ACTIVITES
Acquisition of Land P
Acquisition of Building
Acquisition of Office Equipment
Cash provided from (used in) Investing Activities

FINANCING ACTIVITIES
Initial Investments P
Additional Investments
Owner's Withdrawal
Cash provided from (used in) Financing Activities

NET INCREASE (DECREASE) IN CASH DURING THE YEAR P

CASH AT THE BEGINNING OF THE PERIOD
CASH AT THE END OF THE PERIOD P