Case 1.

Comparative data for Mahaba Toh Corporation for the two-year period 2019 and 2018 are as follows:
INCOME STATEMENT
2018 2019
Sales P1,500,000 P2,000,000
Cost of goods sold 900,000 1,200,000
Gross profit 600,000 800,000
Selling, general, and other expenses 100,000 150,000
Income tax expense 150,000 195,000
Net income 350,000 455,000

BALANCE SHEET
2018 2019
ASSETS
Cash P100,000 P150,000
Accounts Receivable 400,000 450,000
Inventory 300,000 400,000
Prepaid expenses - 50,000
Plant and Equipment, net 1,200,000 1,150,000
TOTAL ASSETS P2,000,000 P2,200,000

LIABILITIES & EQUITY

Accounts Payable 150,000 200,000
Short-term Notes Payable 350,000 400,000
Bonds Payable (10%) 500,000 500,000
Common Stock (P10 par) 400,000 400,000
Retained Earnings 600,000 700,000
TOTAL LIABILITIES & EQUITY 2,000,000 2,200,000

Additional information:
• For the year 2018 and 2019, Mahaba Toh declared dividends amounting to P300,000 and
P450,000, respectively.
• The market price of the share for the years 2018 and 2019 are P15 and P18.

Compute for the following ratios (1pt each):

1. Current ratio.
2. Acid-test ratio.
3. Asset turnover ratio.
4. Debt to equity ratio.
5. Return on Assets (ROA)
6. Return on Equity (ROE)
Case 2.

Indicate the effects of each of the following transactions on the following ratios. There are three
possible answers: increase (+), decrease (-), and no effect (0).
Before each transaction takes place, the current ratio is greater than 1 to 1 and the acid-test ratio is less
than 1 to 1.
(2pts each number; 2pts is credited if all 3 ratios are correct, 1pt if 2 ratios are correct and 0pt if 1 or
no ratio is correct)

Current Ratio Return on Return on Asset

Equity
1. Sell merchandise for cash
2. Buy inventory for cash
3. Pay an account payable
4. Borrow cash on a short-term loan
5. Record accrued expenses payable
6. Sell a plant asset for cash at a loss
7. Buy marketable securities for cash
8. Declare and issue a stock dividend

Case 3.

De Leon Company provided the following information for the purpose of presenting the statement of
financial position on December 31, 2021:

Cash 400,000
Accounts Receivable 800,000
Allowance for doubtful accounts 50,000
Inventories 1,000,000
Land 500,000
Building 5,000,000
Accumulated Depreciation – Building 2,000,000
Machinery 3,000,000
Accumulated Depreciation – Machinery 1,200,000
Equipment 400,000
Accumulated Depreciation – Equipment 100,000
Investment in Associate 1,300,000
Prepaid Expenses 100,000
Notes Payable 750,000
Accounts Payable 350,000
Income tax Payable 50,000
Accrued Expenses 60,000
Mortgaged Note Payable in quarterly installments of 100,000 2,000,000
Estimated Liability for Damages 140,000
 Retained Earnings Appropriated for Plant Expansion 1,000,000
Retained Earnings Appropriated for Contingencies 100,000
Share Capital 3,000,000
Share Premium 300,000
Retained Earnings Unappropriated 1,250,000
Trademark 150,000
Secret processes and formulas 200,000
Bank Loan Payable – due June 30, 2023 500,000

Compute for the following (1pt each):

1. Total Current Assets?
2. Total Non-Current Assets?
3. Total Liabilities?
4. Total Shareholder’s Equity?