Toys for the Big boys is a partnership that sells sporting

goods. The partnership agreement provides for 10%

interest on invested capital; salaries of P240,000 to
Alvaro and P280,000 to Yacapin; and bonus for Alvaro.
The 2016 capital accounts were as follows:
Alvaro, Capital Yacapin, capital
8/1 150,000.00 500,000.00 1/1 7/1 100,000.00 700,000.00 1/1
50,000.00 4/1 225,000.00 9/1
Required: For each of the following independent situations, prepare the profit
distribution schedule:
1. Interest is based on average capital balances. The bonus is 5% and is calculated
on profit after bonus. In 2015, profit was P642,600. Any remainder is divided
between Alvaro and Yacapin in a 3:2 ratio respectively
2. Interest is based on ending capital balances after deducting salaries, which the
partners normally withdraw during the year. The bonus is 8% and is calculated
on profit after bonus and salaries. Profit was P1,087,000. Any remainder is
divided equally
3. Interest is based on beginning capital balances. The bonus is 12.5% and is
calculated on profit after bonus. Profit was P769,500. Any remainder is divided
between Alvaro and Yacapin in a 4:2 ratio, respectively
642,600x5%)/105%
Bonus {(1,087,000-
520,000)x8%}/108%
Bonus (769,500x12.5%)/112.5%-
Financial Statements are a structured representation
with the objective of providing information about the
financial positions, financial performance and cash
flows of an entity that is useful to a wide range of users
in making economic decisions.
 Show the results of the management’s stewardship of
the resources entrusted to it
Fair Presentation and Compliance with International
Financial Reporting Standards (IFRS)
 requires the faithful representation of the effects
of transactions, other events and conditions in
accordance with definitions and recognition criteria
for assets, liabilities, income and expenses set out in
the IASB’s framework
 Going Concern
 Accrual Basis of Accounting
 Materiality and Aggregation
 Offsetting
 Frequency of Reporting and Comparative Information
 Consistency of Presentation
 Identification of the Financial Statements
An entity shall clearly identify each financial statement
and the notes.
 Name of the reporting entity
 Whether the financial statements are of the individual
entity or group of entities
 The date of the end of the reporting period or the
period covered by the set of financial statements or
notes;
 The presentation currency;
 And the level of rounding used in presenting amounts
in the financial statements
a. A statement of financial position as at the end of the
period;
b. A statement of comprehensive income for the period;
c. A statement of changes in equity for the period
d. A statement of cash flows for the period
e. Notes, comprising a summary of significant accounting
policies and other explanatory information; and
f. A statement of financial position as at the beginning of
the earliest comparative period when an entity applies an
accounting policy retrospectively or makes retrospective
restatement of items in its financial statements, or when
it reclassifies items in its financial statement
Resembles those of the sole proprietorship with the
exception of the presentation of the division of profits
or losses at the lower portion of the statement
Medina and Detoya
Partial Income Statement
For the Year Ended Dec. 31, 2016

Profit P 300,000.00

Division of Profit (equally)

Partner Medina P 150,000.00
Partner Detoya 150,000.00
Total P 300,000.00
a. Revenue
b. Finance cost
c. Share profit or loss of associates and joint ventures
accounted for using the equity method;
d. Tax expense;
e. A single amount comprising the total of:
I. The post-tax profit or loss of discontinued operations; and
II. The post-tax gain or loss recognized on the measurement
to fair value less costs to sell on the disposal of the assets or
disposal group(s) constituting the discontinued
operations;
f. Profit or Loss;
g. Each component of other comprehensive income
classified by nature ( excluding amounts in (h) below)
h. Share of the comprehensive income of associates and
joint ventures accounted for using the equity method;
and
I Total comprehensive income.
 Medina and Detoya
Statement of Changes in Partner's Equity
For the Year Ended Dec. 31, 2016

Medina Detoya Total

Original Investments P 400,000 P 800,000 P 1,200,000
Add: Additional Investment 100,000 100,000
Total P 500,000 P 800,000 P 1,300,000
Less: Permanent Withdrawals 50,000 50,000
Balances P 500,000 P 750,000 P 1,250,000
Add: Profit 150,000 150,000 300,000
Total P 650,000 P 900,000 P 1,550,000
Less: Temporary Withdrawals 60,000 60,000 120,000
Partners' Equity, Dec. 31 P 590,000 P 840,000 P 1,430,000
Current and noncurrent assets and liabilities should be
separately classified on the face of the statement of
financial position.

 An entity shall classify an asset as current asset when it

satisfies any of the following criteria:
 It expects to realize the assets, intends to sell or consume it,
in its normal operating cycle; or
 It holds the assets primarily for the purpose of trading or
 It expects to realize the asset within 12 months after the end
of the reporting period; or
 the asset is cash or a cash equivalent as defined in IAS No. 7
 A liability should be classified as current liability when
it:
 Is expected to be settled in the normal operating cycle; or
 Is held primarily for the purpose of trading; or
 Is due to be settled within 12 months after the end of the
reporting period; or
 Does not have an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
 Serves as a basis for evaluating the entity’s ability to
generate cash and cash equivalents and the needs to
utilize these cash flows
 Provides information about the cash receipts and cash
payments of an entity during a period.
 It is a formal statement that classifies cash
receipts(inflows) and cash payments (outflows) into
OPERATING ACTIVITIES
INVESTING ACTIVITIES
FINANCING ACTIVITIES
Cash effects of transactions and other events that enter
into the determination of profit or loss
 Major classes of operating cash flows
 Cash Inflows
 Receipts from sale of goods and performance of services
 Receipts from royalties, fees, commissions and other
revenues
 Cash Outflows
 Payments to suppliers of goods and services
 Payments to employees
 Payments for taxes
 Payments for interest expense
 Payments for other operating expenses
 Cash Inflows
 Receipts from sale of property and equipment
 Receipts from sale of investments in debt or equity securities
 Receipts from collections on notes receivable
 Cash Outflows
 Payments to acquire property and equipment
 Payments to acquire debt or equity securities
 Payments to make loans to others generally in the form of
notes receivableser
 Cash Inflows
 Receipts from investments by owners
 Receipts from issuance of notes payable
 Cash Outflows
 Payment to owners in the form of withdrawals
 Payments to settle notes payable
 A&B Company
Statement of Cash Flows
For the Month Ended May 31, 2016

Cash Flows from Operating Activities

Cash received from clients P 604,000
Payments to suppliers (100,000)
payments to employees (138,000)
payments for office rent (80,000)
payments for insurance (140,000)
payments for utilities (30,000)
Net cash provided by (used in) operating activities P 116,000
Cash Flows from Investing Activities
Payments to acquire service vehicle P (4,200,000)
Payments to acquire office equipment (150,000)
Net cash provided by (used in) investing activities (4,350,000)
Cash Flows from Financing Activities
Cash received as investment by owners P 2,500,000
Cash received from borrowings 2,100,000
Payments for withdrawals by owners (140,000)
Net cash provided by (used in) financing activities 4,460,000
Net Increase(Decrease) in Cash and Cash Equivalents P 226,000
Cash and cash equivalents at the beginning of the period 125,000
Cash and cash equivalents at the end of the period P 351,000