Financial Connection

Finance 1De Ramos, Nagas, Manuel

From the account balances given below for Surf Corp. you are tasked to prepare the statement of financial position. Observe proper classifications. In thousand pesos.Problem 1

Accounts TitleAmountAccounts Receivable P 400Advances to officers not currently collectible100Sinking Fund400Building5,000Long-term refundable deposit50Cash and Cash equivalent500Cash Surrender value60Equipment1,000Lease rights100Accrued interest income10Inventories1,300Land1,500Land held for speculation500Notes Receivable250Computer Software3,250

Accounts TitleAmountPrepaid ExpensesP 70Trading Securities280Unearned rent income40Retained earnings (deficit)(1,800)Share premium preference shares500Premium on bonds payable1,000Preference share capital2,000Share premium Ordinary200Notes payable300SSS payable10Accounts payable400Accrued salaries100Accumulated depreciation building2,000Accumulated depreciation equipment200Allowance for doubtful accounts20

Accounts TitleAmountBonds payableP 5,000Dividends payable120Ordinary share capital5,000Withholding tax payable30Preference share redemption fund350

Balance SheetList of an entitys assets, liabilities, and owners equity as of a specific date. Also called the Statement of financial position.

Surf CorporationStatement of Financial PositionASSETSCurrent asset:Cash and Cash equivalentsPhp 500,000.00 Trading securities 280,000.00 Inventories 1,300,000.00 Prepaid Expense 70,000.00 Trade and other receivables 640,000.00 Total current Assets Php 2,790,000.00 Non Current assetProperty, Plant and EquipmentPhp 5,300,000.00 Long-term Investments 1,310,000.00 Intangible Assets 3,350,000.00 Other Non Current Assets 150,000.00 Total Non Current Assets 10,110,000.00 TOTAL ASSETSPhp 12,900,000.00

Trade and other ReceivableAccounts ReceivablePhp 400,000.00 Notes Receivable 250,000.00 Accrued Interest Income 10,000.00 Allowance for doubtful Accounts (20,000.00)TotalPhp 640,000.00

Property, Plant and EquipmentCostAccum. DepBook valueLandPhp 1,500,000.00 - 1,500,000.00 Building 5,000,000.00 2,000,000.00 3,000,000.00 Equipment 1,000,000.00 200,000.00 800,000.00 TOTALPhp 7,500,000.00 2,200,000.00 5,300,000.00

Long Term InvestmentLand held for speculationPhp 500,000.00 Sinking fund 400,000.00 Preference share redemption fund 350,000.00 Cash surrender value 60,000.00 TotalPhp 1,310,000.00 Intangible AssetsComputer softwarePhp 3,250,000.00 Lease rights 100,000.00 TotalPhp 3,350,000.00 Other Non Current AssetsAdvances to officers not currently collectiblePhp 100,000.00 Long-term refundable deposits 50,000.00 TotalPhp 150,000.00

LIABILITIES and EQUITYCurrent liabilties:Trade and Other PayablesPHP 1,000,000.00 Non Current liabilities:Bonds Payable5,000,000.00 Premium on Bonds Payable1,000,000.00 Total LiabilitiesPHP 7,000,000.00 Shareholder's Equity:Share Capital7,700,000.00 Retained Earning (Deficit)(1,800,000.00)Total Shareholder's EquityPHP 5,900,000.00 Total Liabilities and Shareholders' EquityPHP 12,900,000.00

Trade and Other PayableAccounts PayablePhp 400,000.00 Notes Payable300,000.00 Unearned Rent Income40,000.00 SSS Payable10,000.00 Accrued Salaries100,000.00 Dividends Payable120,000.00 Withholding Tax Payable30,000.00 TotalPhp 1,000,000.00 Share CapitalPreference Share CapitalPhp2,000,000.00 Share Premium-Preference Share500,000.00 Ordinary Share Capital5,000,000.00 Share Premium- Ordinary Share200,000.00 TotalPhp 7,700,000.00

If you are a shareholder of a company, it is important that you understand how the balance sheet is structured, how to analyse it and how to read it.Conclusion

THANK YOU!