Batangas State University

Main Campus 1, Rizal Avenue, Batangas City

GRADUATE SCHOOL
Introductory Assessment
BA-506 FINANCIAL MANAGEMENT
Dr. Elisa Sulit Diaz

A. Rachel Chu, the owner-manager of, YMB, engaged in Merchandising business

requested you to prepare the temporary income statement, statement of changes in
owner’s equity and the Balance Sheet as of March 31, 2019.

The following transactions were incurred during the accounting period January 2019 up
to March 31, 2019.

January, 2019 transactions:

1. Beginning of the year, Jan.2, Rachel Chu invested P500,000.00 to the business by
opening a checking account at BPI.
2. Amount of FFE (tables, chairs, computer equipments, ACUs) were purchased in the
amount of P300,000.00. 50% of which is on account. FFE has an estimated life of 5
years.
3. Conduct interviews and hired two employees with a salary of P10,000.00 a month per
employee.
4. Additional investment of P500,000.00 was given to the business. Such amount was
borrowed from a bank for five years.
5. To situate the business, Ms. Yu, purchased the Land for P200,000.00 and contracted
to construct a building for P300,000 to be paid for one year. The building will be
depreciated for 15 years.
6. Supplies for P20,000.00 were also purchased on accounts from supplier.

February transactions.

1. Pre-operating expenses were incurred:

a. Business permits - 5,000.00
b. Zoning Permit - 3,500.00
c. Bureau of Fire - 1,500.00
d. BIR - 10,000.00
e. Electrical & Water installation – 7,500.00
2. First payment to contractor was paid.
3. Merchandises Inventory purchased – P300,000.00 on account
4. Paid salaries of two employees – P20,000.00
5. Sales received for the month – P 50,000.00
6. Credit sales recorded for the month – P100,000.00
7. Paid Utilities, for P8,000.00 for the month.

March transactions:

1. Partial payment of P25,000.00 was made on the purchased of FFE on

January.
2. Sales of merchandises from corporate account, P125,000.00
3. Partial payment of cost of merchandise purchased on Feb., P150,000.00
4. Received partial payment of P50,000.00 from credit sales recorded.
5. Paid Salaries of employees, P20,000.00
6. Paid Utilities, P7,890.00
7. Payment made to cost of merchandise purchase, P125,000.00
8. Sales for the month P300,000.00
9. Capital drawings made by Rachel Yu, P200,000.00
.

B. Based on the prepared Financial Statements, analyze and interpret the statements
based on the following financial analysis tools;
1. Structural Analysis or the Common Size Peso Analysis
2. Ratio Analysis:
Liquidity ratios;
Profitability ratios and
Solvency Ratios

-TO GOD BE THE GLORY-