Problem 1From the account balances given below for Surf Corp. you are tasked to prepare the statement of financial position. Observe proper classifications. In thousand pesos.
Accounts Title AmountAccounts Receivable P 400Advances to officers not currently collectible 100Sinking Fund 400Building 5,000Long-term refundable deposit 50Cash and Cash equivalent 500Cash Surrender value 60Equipment 1,000Lease rights 100Accrued interest income 10Inventories 1,300Land 1,500Land held for speculation 500Notes Receivable 250Computer Software 3,250
Accounts Title AmountPrepaid Expenses P 70Trading Securities 280Unearned rent income 40Retained earnings (deficit) (1,800)Share premium – preference shares 500Premium on bonds payable 1,000Preference share capital 2,000Share premium – Ordinary 200Notes payable 300SSS payable 10Accounts payable 400Accrued salaries 100Accumulated depreciation – building 2,000Accumulated depreciation – equipment 200Allowance for doubtful accounts 20
Accounts Title AmountBonds payable P 5,000Dividends payable 120Ordinary share capital 5,000Withholding tax payable 30Preference share redemption fund 350
Balance SheetList of an entity’s assets, liabilities, and owner’s equity as of a specific date. Also called the Statement of financial position.
Surf Corporation Statement of Financial Position ASSETSCurrent asset: Cash and Cash equivalents Php 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 2,790,000.00Non Current asset Property, Plant and Equipment Php 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 ASSETS Php 12,900,000.00
Trade and other Receivable Accounts Receivable Php 400,000.00 Notes Receivable 250,000.00 Accrued Interest Income 10,000.00 Allowance for doubtful Accounts (20,000.00) Total Php 640,000.00Property, Plant and Equipment Cost Accum. Dep Book value Land Php 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 TOTAL Php 7,500,000.00 2,200,000.00 5,300,000.00
Long Term Investment Land held for speculation Php 500,000.00 Sinking fund 400,000.00 Preference share redemption fund 350,000.00 Cash surrender value 60,000.00 Total Php 1,310,000.00Intangible Assets Computer software Php 3,250,000.00 Lease rights 100,000.00 Total Php 3,350,000.00Other Non Current Assets Advances to officers not currently collectible Php 100,000.00 Long-term refundable deposits 50,000.00 Total Php 150,000.00
LIABILITIES and EQUITYCurrent liabilties: PHP Trade and Other Payables 1,000,000.00Non Current liabilities: Bonds Payable 5,000,000.00 Premium on Bonds Payable 1,000,000.00 PHP Total Liabilities 7,000,000.00Shareholders Equity: Share Capital 7,700,000.00 Retained Earning (Deficit) (1,800,000.00) PHP Total Shareholders Equity 5,900,000.00Total Liabilities and Shareholders PHPEquity 12,900,000.00
Trade and Other Payable Accounts Payable Php 400,000.00 Notes Payable 300,000.00 Unearned Rent Income 40,000.00 SSS Payable 10,000.00 Accrued Salaries 100,000.00 Dividends Payable 120,000.00 Withholding Tax Payable 30,000.00 Total Php 1,000,000.00Share Capital Preference Share Capital Php 2,000,000.00 Share Premium-Preference Share 500,000.00 Ordinary Share Capital 5,000,000.00 Share Premium- Ordinary Share 200,000.00 Total Php 7,700,000.00
Conclusion If you are a shareholder of a company, it is important that youunderstand how the balance sheetis structured, how to analyse it and how to read it.