Professional Documents
Culture Documents
Assignment Chapter 1
Assignment Chapter 1
A. How much is each net worth? The higher the net worth, the more business is solvent. The net worth of Maamo is
₱300,000
Maganda’s net worth is ₱200,00
Therefore, Maamo has the higher net worth
B. Is the business profitable? Compute for return on equity: net income/ net worth x 100. Compute for
return on asset: net income divided by assets x 100.
=Yes
ROE= (Maamo= 33.33%, Maganda= 50%)
ROA= (Maamo= 20%, Maganda= 25%)
C. Who is more solvent? Who is more profitable?
=Maganda is more solvent and profitable
D. Decide whom to lend.
= Of course, the one who’s more profitable and that is MAGANDA
12. Gary, a businessman, plans to sell his Rent A Car Agency and go to abroad to join his family. He offers to sell his
business to a friend, Willy. The assets amount to P1,500,000 one-third of which was borrowed from the bank and is still
outstanding. Willy wants to know what will be a fair price for Gary’s business. He has only P750,000 and thinks that it may
not be enough. You agreed to help her and ask for Gary’s statement of Financial Position.
The assets include accounts due from clients P150,000 whose whereabouts Gally could not for certain know anymore
except for one customer who owes P50,000. Repair equipment is another asset listed in the statement as P500,000 which
was bought 10 years ago but is currently half its cost price. Given this information, what will be the revised total assets of
the business and what will be its net worth to the owner? Will the money of Willy be sufficient to buy the business of
Gary?
Can Willy afford to pay? Compare the revised net worth with the money Willy has. The statement of Financial Position is
discussed intensively in Chapter 3,4, and 8.
= Yes, willy can afford to buy because his assets are worth ₱750,000 meanwhile the revised net worth is only
₱650,000
13. Continue with the Doria illustration, refer to page 16. The following transactions took place for the month of July. Sales
amounted to P52,000. Paper and ink were purchased and paid for P20,000. Total Supplies available amounted to P32,000,
half of these were used up. Monthly rent was again paid. Power and water were paid but it increased by P2,000 Doria
made a P3,000 cash withdrawal. She paid her UCPB Loan for P50,000.
Rent ( 5,000 )
Power and Water ( 5,000 )
Supplies Used (16,000)
Profit for July ₱26,000
Supplies 16,000
Copying Equipment _ 350,000 Total Assets
₱405,000
Loan Payable ₱150,000
orth of Maamo is
e for
of Financial Position is
worth is only
the month of July. Sales
e amounted to P32,000,
sed by P2,000 Doria
Assets
ee
Cash purchase for equipment 100,000
Cash purchase for furniture 25,000
The policy of the store is: No credit allowed. Likewise, all expenses are paid in cash.
Required: follow the Doria format of no. 13 and
a.) Compute for the profit or loss after 3 months of operation.
Statement of Income (well produced for July)
Sales ₱205,000
Utilities, Salaries, and Rent paid (115,000)
₱90,000
16. The cash balance of Waterfront Hotel on December 31of the previous year was P750,000 for 2019,
the finance manager made the following forecasts:
a.) Total revenues will amount to P1,200,000 but P200,000 will be uncollected.
b.) Total expenses will amount to P550,000 but P150,000 will be unpaid.
c.) Business Loans will be paid P300,000
d.) Owner’s personal drawing will amount to P100,000.
e.) New equipment will be acquired and paid in cash for P175,000
The forecast for cash is that this will decrease because of the loan payment and new equipment
acquisition. Is the finance manager, right?
Use the following as a guide:
Cash Inflows from Sales Revenues ₱1,000,000
Less Cash Outflows for: Expenses paid 400.000
Acquisitions of equipment Net Cash Inflow (or outflow) during 175.000 (975,000)
the month Add: Cash balance December 31, 2018 ₱25,000
Cash Balance December 31, 2019 ₱750,000
₱775,000
019,