Ablo, Franco, Jallorina, Lopez, Moreno

FS Preparation

I. Income Statement Preparation

Bantag Accounting Services

Income Statement

For the Year Ended December 31, 2022

Operating Revenues

Accounting Services - P500,000.00

Gross Profit - P500,00.00

Administrative Expenses

Mr. Bantag - P96,000

Bookkeeper - P50,000

Clerical Assistant - P36,000

Employment Taxes and Benefit - P34,600

Total Administrative Expenses - P216,600

General Expenses

Office Supplies - P10,400

Travel Expense - P17,000

Rent Expense - P32,400

Depreciation Expense - P15,600

Total General Expenses - P75,400

Overall Expenses - P292,000

Operating Income - P208,000

Less: Interest Expense - (P15,000)

Income Before Tax - P193,000

Less: Income Tax (30%) - P57,900

Net Income - P135,000

Evaluation of Mr. Bantag's Financial Performance

The team is able to infer that Bantag Accounting Services is profitable for the year with a net income of P135,000
after deducting all costs, including interest and taxes, from operational revenues. The net profit of Mr. Bantag's
Accounting Services demonstrates that he successfully manages the costs his business incurs and offers financial
services that are able to meet both the needs of his company and employees, as well as providing for additional needs.
The net profit may also be a sign that Mr. Bantag uses effective pricing methods in his company to increase profits
without jeopardising the demands of his enterprise. However, relying solely on Mr. Bantag's income statement for the
year is still insufficient to determine whether the company is actually performing well as a whole. We must also establish
that accounts receivables, liabilities, and other one-time revenues and expenses are not always reflected in the income
statement, which is why the income statement must be supported by the balance sheet and statement of retained
earnings.

II. Balance sheet preparation

MM,Inc

Balance Sheet

December 31, 2012

ASSETS

Current Assets

Cash - P215,000

Accounts Receivable - P450, 000

 Inventories - P375,000

Marketable Securities - P75,000

Total Current Assets - P1, 115,000

Non - Current Assets

Land - P100,000

Buildings - P225,000

Equipment - P140,000

Furniture and Fixtures - P170,000

Machinery - P420,000

Vehicles - P25,000

Less: Accumulated Depreciation - (P265,000)

Total Non - Current Assets - P815,000

TOTAL ASSETS - P1, 930,000

LIABILITIES

Current Liabilities

Accounts Payable - P220,000

Notes Payable - P475,000

Accruals - P55,000

Total Current Liabilities - P750,000

Non - Current Liabilities

Long - term Debts - P420,000

Total Non - Current Liabilities - P420,000

TOTAL LIABILITIES - P1, 170,000

STAKEHOLDER'S EQUITY

Preferred Stock - P100,000

Common Stock - P90,000

Retained Earnings - P210,000

Paid in Capital - P360,000

Total Stakeholder's Equity - P760,000

TOTAL LIABILITIES AND STAKEHOLDER'S EQUITY - P1, 930,000

Evaluation of MM,Inc. Financial Position

The balance sheet is a statement that gives us an overview of MM's assets, liabilities, and owner equity as of 2012 and
reflects the company's financial situation at that time. If a balance sheet is not balanced, we may have made a mistake
in the problem-solving process. To avoid this, we must always keep in mind that the total assets must always equal the
sum of the liabilities and stakeholder equity. MM, Inc.'s balance sheet demonstrates that the company has all the assets
necessary to cover its debts to its owners and third parties, thus it is fortunate that the total assets, total liabilities,
and stakeholder equity are all equal. Using financial ratios is the most effective and quantitative technique to assess a
company's balance sheet and any other fundamental financial statement. Ratios are a simple way to show the
company's financial health by using useful numerical formulae and values. The balance sheet also reveals that a sizeable
portion of MM Incorporated's assets are funded by debt. In conclusion, an analysis of the balance sheet for MM, Inc.
revealed to us that the financial data is insufficient in being able to determine the overall financial health of the company
because some values when solving for the ratios can only be found in other financial statements.