Rafael Luis C.

Pamonag November 10, 2020

BSBA-2A TTh(9:00-10am)
FM120:Financial Management

Instructions:
1. This activity contains three (3) pages including this page.
2. Provide the information required for each item. Write your answers in clean sheets of paper.
3. Show your solution for Items 2 and 3.
4. Take clear and legible photos of your answer and solution sheets. If possible, convert them,
to a pdf file.
5. Submission guidelines: Submit your answers on or before November 10, 2020, 11:59PM,
via email to financialmanagement120@gmail.com, using the following subject format:

Last Name, First Name – Activity 1

Item No. 1. Financial statement account identification

Mark each of the accounts listed in the following table as follows:

a. In column (1), indicate in which statement – income statement (IS) or balance sheet
(BS) – the account belongs.
b. In column (2), indicate whether the account is a current asset (CA), current liability
(CL), expense (E), fixed asset (FA), long-term debt (LTD), revenue (RV), or stockholders’
equity (SE).

ACCOUNT NAME (1) (2)

STATEMENT TYPE OF ACCOUNT
Accounts payable Balance sheet Current liability
Accounts receivable Balance sheet Current asset
Accruals Balance sheet Current liability
Administrative expense Income statement Expense
Buildings Balance sheet Fixed asset
Cash Balance sheet Current asset
Common stock (at par) Balance sheet Stockholders equity
Cost of good sold Income statement Expense
Depreciation Balance sheet Expense
Equipment Balance sheet Fixed asset
General expense Income statement Expense
Inventories Balance sheet Current asset
Land Balance sheet Fixed asset
Long-term debts Balance sheet Long-term debt
Machinery Balance sheet Fixed asset
Marketable securities Income statement Current asset
Notes payable Balance sheet Current liability
Operating expense Income statement Expense
Paid-in capital in excess of par Balance sheet Stockholders equity
Preferred stock Balance sheet Stockholders equity
Preferred stock dividends Income statements Expense
Retained earnings Balance sheet Stockholders equity
Sales revenue Income statement Revenue
Selling expense Income statemet Expense
Taxes Income statement Expense
Vehicles Balance sheet Fixed asset
Item No. 2 Balance sheet completion using ratios
Complete the 2012 balance sheet for ABC Company using the information that follows it.

ABC Company
Balance Sheet
As of December 31, 2019
ASSETS
Cash P 32,720.00
Marketable Securities 25,000.00
Accounts receivable 197,260.27
Inventories 300,000.00
Total current assets 554,980.27
Net fixed assets 945,019.73
Total Assets P1,500,000.00

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable P 120,000.00
Notes payable 200,612.67
Accruals 20,000.00
Total current liabilities 340,612.67
Long-term debt 559,387.33
Stockholders’ equity P 600,000.00
Total liabilities and stockholders’ equity P1,500,000.00

The following financial data for 2019 are also available:

a. Sales totaled Php 1,800,000.
b. The gross profit margin was 25%.
c. Inventory turnover was 6.0.
d. There are 365 days in the year.
e. The average collection period was 40 days.
f. The current ratio was 1.60.
g. The total asset turnover ratio was 1.20.
h. The debt ratio was 60%.
Hint No. 1: You may start with the formula for Average Collection Period.)
Hint No. 2: Instead of using the Average Inventory or Average Receivables in solving some
ratios, use the ending balances instead.

My Solution:

𝑎𝑐𝑐𝑜𝑢𝑛𝑡 𝑟𝑒𝑐𝑒𝑖𝑣𝑎𝑏𝑙𝑒𝑠
1. ACP = 365days = 1,800,00
40 = 365 × 1,800,000
AR = 40/365 × 1,800,000

Account Receivable: P 197,260.27

𝑆𝐴𝐿𝐸𝑆
2. Inventory Turnover Ratio = 𝐼𝑁𝑉𝐸𝑁𝑇𝑂𝑅𝑌
𝑃1,800,000
6.0 = 𝐼𝑁𝑉𝐸𝑁𝑇𝑂𝑅𝑌

𝑃1,800,000
Inventory = 6.0

Inventory = P 300,000
 𝑆𝐴𝐿𝐸𝑆
3. Total Assets Turnover ratio = 𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇

𝑃1,800,000
1.20 = 𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇

𝑃1,800,000
Total asset = 1.20

Total Assets = P1,500,000

𝑇𝑂𝑇𝐴𝐿 𝐿𝐼𝐴𝐵𝐼𝐿𝐼𝑇𝐼𝐸𝑆
4. Debt ratio = 𝑇𝑂𝑇𝐴𝐿 𝐴𝑆𝑆𝐸𝑇

𝑇𝑂𝑇𝐴𝐿 𝐿𝐼𝐴𝐵𝐼𝐿𝐼𝑇𝐼𝐸𝑆
60% = 𝑃1,500,000

Total Liabilities = P1,500,000 × 0.60

Total Liabilities = P900,000

𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝐴𝑆𝑆𝐸𝑇𝑆
5. Current ratio = 𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝐿𝐼𝐴𝐵𝐼𝐿𝐼𝑇𝐼𝐸𝑆

𝑃554,980.27
1.60 = 𝐶𝑈𝑅𝑅𝐸𝑁𝑇 𝐿𝐼𝐴𝐵𝐼𝐿𝐼𝑇𝐼𝐸𝑆

𝑃554,980.27
Current Liabilities = 1.60

Current Liabilities = P340,612.67

6. Long-Term Debt = Total Liabilities – Current Liabilities

Long-Term debt = P900,000 - P340,612.67

Long- Term Debt = P559,387.33