LESSON 2 (FINANCIAL STATEMENTS BASED ON PHILIPPINE

ACCOUNTING STANDARDS (PAS) #1)

ACTIVITY
TASK 1
1. Are your parents working? What is the salary of your parents?
 Yes, my parents are working and their salary is Php 70,000.

2. How do they budget their salary as to the following bracket below?

a. Food ₱10,000

b. Cloths 1,000
c. Construction / Renovation of house 3,500
d. Education 30,000
e. Savings/Investment 6,000
f. Current bills 6,000
g. Water bills 1,500
h. Insurance 1,000
i. SSS/GSIS 1,000
j. Pag-ibig 1,000
k. Other needs (vacation, luxuries, gadgets & etc.) 6,000
l. Loans 3,000

3. Make a simple income statement showing your income or salary minus expenses
equals savings based on given data in the activity above.
 The salary of my parents is 70,000 where the budget for food and clothes
is 11,000, for the education 30,000, for current and water bills is 7,500,
savings/investment and insurance are 7,000. For the SSS/GSIS and Pag-
ibig the budget is 2,000, while 6,000 for other needs, and 3,000 for loans.

ANALYSIS
TASK 2
1. In your own direction why it is necessary to budget/spend your salary/money
wisely?
  A budget forces you to map out your goals, save your money, keep track
of your progress, and make our dreams a reality. It helps ensure that I do
not spend money on what is not needed, and know exactly how much
money we earn, how much we can afford to spend each month and how
much we need to save. It as well helps in preparing for emergencies.
When a family member gets laid off, become sick or injured, go through a
divorce, or have a death in the family, it can lead to some serious financial
turmoil so we are already strapped for cash. This extra money will ensure
that we don't spiral into the depths of debt after a life crisis. Spending our
money wisely isn’t just about avoiding unnecessary purchases – it also
requires us to take the money that we save and put it towards things that
will help us reach our financial goals. With that in mind, there’s no such
thing as starting investing too early or investing too little. Building a
budget force for us to take a close look at your spending habits. Try
keeping track of what we spend money on during a one-month period.
This can help you see where our money goes and where we may be able
to save. Thus, it is essential to figure out whether you’re saving as much
as you can, decide what you’re saving for, set a deadline for your goal.

APPLICATION
TASK 3

Surf Corporation
Statement of Financial Position

ASSETS
Current Assets
Cash and Cash equivalents P 500,000.00
Trading securities 280,000.00
Trade and other receivables 640,000.00
Inventories 1,300,000.00
Prepaid Expenses 70,000.00
Total Current Assets P 2,790,000.00

Non-Current Assets
Property, Plant and Equipment P 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 P 10,110,000.00
TOTAL ASSETS P 12,900,000.00

Trade and other Receivables

Accounts Receivable P 400,000.00
Notes Receivable 250,000.00
Accrued Interest Income 10,000.00
Allowance for doubtful Accounts (20,000.00)
Total P 640,000.00

Property, Plant, and Equipment

Cost Accumulated Depreciation Book Value
Land P 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 7,500,000.00 2,200,000.00 5,300,000.00

Long Term Investment

Land held for speculation P 500,000.00
Sinking fund 400,000.00
Preference share redemption fund 350,000.00
Cash surrender value 60,000.00
Total P 1,310,000.00

Intangible Assets
Computer Software P 3,250,000.00
Lease Rights 100,000.00
Total P 3,350,000.00

Other Non-Current Assets

Advances to Officers Not Currently Collectible P 100,000.00
 Long-term Refundable Deposits 50,000.00
Total P 150,000.00

LIABILITIES

Current Liabilities
Trade and Other Payables P 1,000,000.00

Non-Current Liabilities
Bonds Payable 5,000,000.00
Premium on Bonds Payable 1,000,000.00
TOTAL LIABILITIES P 7,000,000.00

EQUITY
Share Capital P 7,000,000.00
Reserves 700,000.00
Retained Earnings (Deficit) (1,800,00.00)
TOTAL SHAREHOLDER’S EQUITY P (5,900,00.00)
TOTAL LIABILITIES AND EQUITY P 12,900,00.00

Trade and Other Payables

Accounts Payable P 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 P 1,000,000.00

Share Capital
Preference Share Capital P 2,000,000.00
Ordinary Share Capital 5,000,000.00
Total P 7,000,000.00

Reserves
 Share Premium – Preference Share P 500,000.00
Share Premium – Ordinary Share 200,000.00
Total P 700,000.00

ASSESSMENT
KARLA CORPORATION
INCOME STATEMENT

Notes
Net Sales Revenue P 15,400,000
Cost of Sales (10,000,000)

Gross Income 5,400,000

Other Income 800,000
Total Income 6,200,000

Expenses:
Selling Expenses P 1,900,000
Administrative Expenses 1,600,000
Other Expenses 200,000 (3,700,000)
Net Income Before Income Tax 2,500,000
Income Tax (500,000)
Net Income After Tax P 2,000,000

Supporting Notes
Net Sales Revenue
Sales P 15,700,000
Less: Sales Returns and Allowances (280,000)
Sales Discounts (20,000)
Net Sales P 15,400,000

Costs of Sales
Inventory, January 1 P 2,000,000
Add: Net Purchases
Purchases 10,500,000
Freight – in 1,000,000
Total 11,500,000
 Less: Purchase Returns and Allowances (300,000)
Purchase Discounts (200,000) 11,000,000
Total Merchandise Available for Sale 13,000,000
Less: Inventory, December 31 (3,000,000)
Cost of Sales P 10,000,00
Other Income
Rental Income P 500,000
Dividend Income 300,000
Total P 800,000

Selling Expenses
Freight – out P 350,000
Salesmen’s Commission 1,300,000
Depreciation Expense – Store Equipment 250,000
Total P 1,900,000

Administrative Expenses
Officers’ Salaries P 1,000,000
Depreciation Expense – Office Equipment 600,000
Total 1,600,000

Other Expenses
Loss on Sale of Equipment P 100,000
Loss on Sale of Investment 100,000
Total P 200,000