Lan Services Incorporated

Income Statemend
For the Year Ended December 31, 2020
Note
Sales revenue ₱ 507,000
Cost of goods sold (150,000)
Gross profit ₱357,000
Expenses:
Operating expenses 111,000
Depreciation expense 9,000
Other expenses 1 45,000 (165,000)
Income before income taxes ₱192,000
Income tax expense 47,000
Net income ₱145,000

Note 1 - Other expenses

Loss on disposal for plant assets 3,000
Interest expenses 42,000
Total 45,000
 Lan Services Incorporated
Comparative Statement of Financial Position
December 31, 2020
Changes in Account
Balance
Assets 2020 2021 Increase/Decrease
Current assets:
Cash ₱ 55,000 ₱ 33,000 ₱ 22,000 Increase
Accounts Receivable 20,000 30,000 (10,000) Decrease
Inventory 15,000 10,000 5,000 Increase
Prepaid expenses 5,000 1,000 4,000 Increase
Total current assets 95,000 74,000

Noncurrent assets:
Land 130,000 20,000 110,000 Increase
Buildings 160,000 40,000 120,000 Increase
Accumulated depreciation - buildings (11,000) (5,000) (6,000) Increase
Equipment 27,000 10,000 17,000 Increase
Accumulated depreciation - equipment (3,000) (1,000) (2,000) Increase
Total noncurrent assets 303,000 64,000
Total assets ₱ 398,000 ₱ 138,000

Liabilities and Stockholders' Equity

Current liabilities:
Accounts Payable ₱ 28,000 ₱ 12,000 ₱ 16,000 Increase
Income taxes payable 6,000 8,000 (2,000) Decrease
Total current liabilities 34,000 20,000

Noncurrent liabilities:
Bonds payable 130,000 20,000 110,000 Increase
Total Non-current liabilities 130,000 20,000

Stockholders' equity
Common stock 70,000 50,000 20,000 Increase
Retained earnings 164,000 48,000 116,000 Increase
Total Stockholders' equity 234,000 98,000
Total Liabilities and Stockholders' Equity ₱ 398,000 ₱ 138,000
 Particulars Debit Credit
A. Operating - Decrease in Accounts Receivable ₱ 10,000
Accounts Payable ₱ 10,000

B. Inventory 5,000
Operating - Increase in Inventory 5,000

C. Prepaid Expenses 4,000

Operating - Increase in Prepaid Expenses 4,000

D. Land 110,000
Bonds Payable 110,000

E. Building 120,000
Investing - Purchase of Building 120,000

F. Equipment 25,000
Investing - Purchase of Equipment 25,000

G. Investing - Sale of Equipment 4,000

Operating - Loss on Sale of Equipment 3,000
Accumulated Depreciation - Equipment 1,000
Equipment 8,000

H. Operating - Increase in Accounts Payable 16,000

Accounts Payable 16,000

I. Income Taxes Payable 2,000

Operating - Decrease in Income Taxes Payable 2,000

J. Financing - Issuance of Common Stock 20,000

Common Stock 20,000

K. Operating - Depreciation Expense - Building 6,000

Accumulated Depreciation - Building 6,000

L. Operating - Depreciation Expense - Equipment 3,000

Accumulated Depreciation - Equipment 3,000

M. Operating - Net Income 145,000

Retained Earnings 145,000

N. Retained Earnings 29,000

Financing - Payment of Dividends 29,000
O. Cash 22,000
Increase in Cash 22,000
 Lan Service Incorporate
Worksheet
Statement of Cash Flows for the Year Ended December 31, 2020
Reconciling Items
Balance Balance
Balance Sheet Accounts 12/31/19 Debit Credit 12/31/20
Debits
Cash ₱ 33,000 ₱ 22,000 ₱ 55,000
Accounts Receivable 30,000 10,000 20,000
Inventory 10,000 5,000 15,000
Prepaid Expenses 1,000 4,000 5,000
Land 20,000 110,000 130,000
Buildings 40,000 120,000 160,000
Equipment 10,000 25,000 8,000 27,000
Total ₱ 144,000 ₱ 412,000
Credits
Accounts Payable 12,000 16,000 28,000
Income Tax Payable 8,000 2,000 6,000
Bonds Payable 20,000 110,000 130,000
Accumulated Depreciation - Buildings 5,000 6,000 11,000
Accumulated Depreciation - Equipment 1,000 1,000 3,000 3,000
Common Stock 50,000 20,000 70,000
Retained Earnings 48,000 29,000 145,000 164,000
Total ₱144,000 ₱ 412,000

Statement of Cash Flows Effects

Operating acrivities
Net Income ₱ 145,000
Decrease in accounts receivable 10,000
Increase in inventory ₱ 5,000
Increase in prepaid expenses 4,000
Increase in accounts payable 16,000
Increase in income taxes payable 2,000
Depreciation expense - building 6,000
Depreciation expense - equipment 3,000
Loss on disposal of plant assets/equipment 3,000
Investing activities
Purchase of building 120,000
Purchase of equipment 25,000
Sale of equipment 4,000
Financing activities
Issuance of common stock 20,000
Payment of dividends 29,000
Totals 525,000 503,000
Increase in cash 22,000
Totals ₱ 525,000 ₱ 525,000