Part II.

Solve the following problems:

1. Mr. Sojo opened an internet shop on October 1 with a cash investment of P50,000. After
three months of operation, the following activities were given to you for study:
Cash received from customers P160,000
Cash borrowed from the bank 150,000
Utilities, salaries, supplies, and rent paid 105,000
Cash paid to the bank 50,000
Cash purchased for equipment 100,000
Cash purchased for furniture 25,000

Assume that the policy of the store is: No Credit allowed. Expenses are all paid in cash.
Required: a) Compute for the correct profit and loss after three months of operation.
b) Compute for the cash flows for three months ending December.
c) Prepare statement of changes in equity for the three-month period.
d) Compute for the net worth by preparing a statement of financial position.

2. As it was nearing Christmas, Helen asked her mother if she could have a cell phone as a
gift. She wanted one that costs P15,000 but her mother could only give her P5,000. She
asked her mother for the money so she can use it for a small business which will earn
P10,000 so she can buy the cell phone she likes so much. For the first week of
December, she used P4,500 to buy some pastries and cakes and P300 for taxi fare. She
was able to sell all of the pastries and cakes for P7,000. On December 8, she bought
several baskets of assorted fruits for P5,000 and paid for taxi fare, P300. She was able to
sell all of these fruits for P8,000. On December 15, she bought a few kilos of ham an hot
dog for P6,000. All were sold for P10,000 except for P300 worth of ham which she kept
for her and her family’s Christmas meal. (Consider this as a personal drawing decreasing
Helen, Capital)
Required: a) Prepare financial statement for three weeks, December 1 to December 21. Do
not prepare a weekly reports.
b) How much was the total profit for three weeks?
c) How much cash did she have after three weeks?
d) Can she afford to buy the cell phone?