Agbon, Paolo

Genova, Brian
Llagas, Angela Fye

05 Quiz 1

Balance Sheet

Balance Sheet Accounts (Dec. 31) 201B 201A

Cash 290,000 150,000
Marketable Securities 1,000,000 850,000
Accounts Receivable, net 1,000,000 500,000
Inventories 500,000 750,000
Prepaid expenses 90,000 100,000
Land 700,000 500,000
Building, net 500,000 550,000
Machinery and Equipment, net 1,500,000 1,700,000
Notes Payable, Trade 150,000 100,000
Accounts Payable, net 635,000 610,000
Expenses Payable 20,000 40,000
Long-term Notes 2,250,000 2,500,000
Owner's Capital 2,000,000 2,000,000

Income Statement
Income Statement Accounts (Dec. 31) 201B
Sales 5,250,000
Sales Returns and Allowances 250,000
Inventory, Dec. 31, 201B 500,000
Inventory, Dec. 31, 201A 750,000
Purchases 2,750,000
Selling Expenses 400,000
Administrative Expenses (including Depreciation of
P250,000) 600,000
Interest expense 250,000
1. Prepare an income statement for the year ended December 31, 201B. (10 points)

Income Statement
For the year ended December 31, 201B
Sales 5,250,000
Less: Sales Returns and Allowances 250,000
Net Sales 5,000,000
Less: Cost of Goods Sold 250,000
Gross Profit 4,750,000
Less: Operating Expenses 3,750,000
Income from operations 1,000,000
Less: Interest Expense 250,000
Income before income tax 750,000
Less: Income Tax (30%) 225,000
Net Income 525,000

2. Prepare a comparative statement of financial position for 201B and 201A. (10 points)

Statement of Financial Position

201B 201A
ASSETS
Current Assets
Cash 290,000 150,000
Marketable Securities 1,000,000 850,000
Accounts Receivable 1,000,000 500,000
Inventories 500,000 750,000
Prepaid Expenses 90,000 100,000
Non-current Assets
Land 700,000 500,000
Building, net 500,000 550,000
Machinery and Equipment, net 1,500,000 1,700,000

TOTAL ASSETS 5,580,000 5,100,000

LIABILITIES
Current Liabilities
Notes Payable, Trade 150,000 100,000
Accounts Payable, net 635,000 610,000
Expenses Payable 20,000 40,000
Non-current Liabilities
Long-Term Notes 2,250,000 2,500,000
TOTAL LIABILTIES 5,055,000 3,250,000
 OWNER'S EQUITY
Owner's Capital 2,525,000 2,000,000
TOTAL LIABILTIES AND OWNER'S EQUITY 5,580,000 5,100,000

3. Prepare a vertical analysis of the income statement for the year ended December 31,
201B. (12 items x 1 point)

Income Statement
For the year ended December 31, 201B Vertical Analysis
Sales 5,250,000 100%
Less: Sales Returns and Allowances 250,000 5%
Net Sales 5,000,000 95%
Less: Cost of Goods Sold 250,000 5%
Gross Profit 4,750,000 90%
Less: Operating Expenses 3,750,000 71%
Income from operations 1,000,000 19%
Less: Interest Expense 250,000 5%
Income before income tax 750,000 14%
Less: Income Tax (30%) 225,000 4%
Net Income 525,000 10%

4. Prepare a horizontal analysis showing the peso changes and percentage changes for
201B as compared with 201A. (38 items x 1 point)

Statement of Financial Position Horizontal Analysis

Peso Percentage
201B 201A Change Change
ASSETS
Current Assets
Cash 290,000 150,000 140,000 48.3%
Marketable Securities 1,000,000 850,000 150,000 15.0%
Accounts Receivable 1,000,000 500,000 500,000 50.0%
Inventories 500,000 750,000 250,000 (50.0%)
Prepaid Expenses 90,000 100,000 10,000 (11.1%)
Non-current Assets
Land 700,000 500,000 200,000 28.6%
Building, net 500,000 550,000 50,000 (10.0%)
Machinery and Equipment, net 1,500,000 1,700,000 200,000 (13.3%)

TOTAL ASSETS 5,580,000 5,100,000 480,000 8.6%

LIABILTIES
Current Liabilities
Notes Payable, Trade 150,000 100,000 50,000 33.3%
Accounts Payable, net 635,000 610,000 25,000 3.9%
Expenses Payable 20,000 40,000 20,000 (100%)
Non-current Liabilities
Long-Term Notes 2,250,000 2,500,000 250,000 (11.1%)
TOTAL LIABILTIES 3,055,000 3,250,000 195,000 (6.4%)
OWNER'S EQUITY
Owner's Capital 2,525,000 2,000,000 525,000 20.8%
TOTAL LIABILTIES AND OWNER'S
EQUITY 5,580,000 5,100,000 480,000 8.6%