The Balance Sheet

A balance sheet is a financial document designed to

communicate exactly how much a company or
organization is worth—its so-called “book value.”
The Balance Sheet

A balance sheet is a financial document designed to

communicate exactly how much a company or
organization is worth—its so-called “book value.”
 Current Assets

Cash and Cash Equivalents

Assets
• Cash
– Cash is the money owned by the company. This may be
sourced from the contribution of the owners, proceeds from
borrowings, sales of assets or collection from Customers.

Cash Equivalents
It will become cash within 90 days. Example, Time Deposits
3 mos.
Given the following determine the Cash account of the 2FM
store:
1. She has 3pieces 100 peso bills, 5 pieces 50 peso bills, 5 pieces 20 peso
bills, 5 pieces of 10 peso coins, 10 pieces of 5 peso coins and 10 pieces 1
peso coins.

2. She also received payment from customers the following checks:

a. P1,500 check dated December 31, 20X1.
b. P2,432 check dated January 2, 20X2.

3. She has a bank account in the name of the store passbook amounting to
P20,500.

 Report the cash account for 2FM Store at end of the CY 20x1.
Number of Bills Denomination Amount

3 P 100 P 300.00

5 50 250.00

5 20 100.00

5 10 50.00

10 5 50.00

10 1 10.00

TOTAL P 760.00

Check Dec.31,20X1 1,500.00

Total Cash on Hand P 2, 260.00

Cash in Bank 20,500.00

Total Cash in CY 20X1 P 22,760.00

• 4. A time Deposit certificate for P 50,000 for 90 days.

• How much Cash and Cash Equivalents account will be

reported?
• Answer Activity 4
Cash and Cash Equivalents
• 2FM Store is managed by Juan Dela Cruz. Juan asked you to determine the balance
of his cash account as of December 31, 20X1. You determined the following:

1. He kept some cash in the store as change (sukli). The cash count revealed 5 pieces
of 100 peso bills, 5 pieces of 50 pieces bills, 8 pieces of 20 peso bills, 2 pieces of 10
peso coins, 10 pieces of 5 peso coins, 10 pieces of 1 peso coins and 32 pieces of 25
centavo coins.

2. Two of his customers gave him the following checks in payment of debts:
a. P 1,540 check dated December 31, 20X1.
b. P 2,423 check dated January 2, 20X2.
3. There are two bank accounts in the name of the store with the following balances:
a. Balance of the savings account on December 31, 20X1 according to passbook is P 26,780.

b. A time deposit certificate for P100,000 for 90 days.

• Required:

•Report to Juan Dela Cruz the balance of the cash and cash equivalents account of 2FM
Store for the Calendar Year 20X1.
Accounts Receivable (AR)
• is the balance of money due to a firm for goods or
services delivered or used but not yet paid for by
customers.

• Accounts receivables are listed on the balance sheet as a

current asset.

• AR is any amount of money owed by customers for

purchases made on credit.
• Example:

– Juana asked you to compute how much Maria Reyes owed the
store. Juana sells to Maria on credit. Maria pays every 15th
and 30th of the month. Maria’s listing are reproduced below.
• Answer Activity 5
Activity 5- Accounts Receivable
• Mr. X owes the 2FM store the following items. Every
15th of the month is his salary, thus he will pay a
corresponding amount of his credit. Compute for the Net
receivable of 2FM store given the following data from
Accounts Receivable record book.
• Accounts Receivable - Mr. X

Balance P 120.00
Jan 3 3 bottles of Cola (P12 each)
6 2 packs milk powder (P15 each)
15 Payment P50.00
25 2 bags Chips (P35 each)
Feb 5 2 kilos sugar ( P42 per kilo)
15 Payment P 40.00
18 1 can sardines (P25)
March 1 3 packs baking powder (P22 each)
22 4 sachets conditioner (P15 each)
Net Receivable
Merchandise
Inventory
Merchandise Inventory
• Inventory refers to a company’s goods and products that
are ready to sell.

• It reports the cost of unsold merchandise.

• Only merchandise held for sale are reported as Inventory.

Those items that are to be used in the daily activities are
Supplies and not inventory.
• Consignment is an important issue in inventory
accounting. The store should not report the consigned
goods as inventory even if they are found in the store
premises.

• The consigned merchandise will be reported as Inventory

by the merchandise owner.
 Example :
• Before Juana opened the store on the next years’ operation, she asked you
to help her count the merchandise inside the store. The result of the count
were given below:
Merchandise Cost
2 bags of candy P 30 per bag
10 sachets of coffee P 6 per sachet
10 sachets laundry powder P 15 per sachet
1 sack rice P 1,800 per sack
10 cans sardines P 15 per can
10 bars chocolate bars P 20 per bar
5 notebooks P 25 per notebook
• Report to Juana the balance of the merchandise inventory account of 2FM store.
 Answer
Merchandise Cost Total
2 bags of candy P 30 per bag P60.00

10 sachets of coffee P 6 per sachet 60.00

10 sachets laundry powder P 15 per sachet 150.00

1 sack rice P 1,800 per sack 1,800.00

10 cans sardines P 15 per can 150.00

10 bars chocolate bars P 20 per bar 200.00

5 notebooks P 25 per notebook 125.00

Merchandise Inventory as December 31,20X1 P2,545.00

• Answer Activity 6
 Activity 6 :
• Before Juana opened the store on the next years’ operation, she asked you
to help her count the merchandise inside the store. The result of the count
were given below:
Merchandise Cost Total
2 bags of candy P 30 per bag
10 sachets of coffee P 6 per sachet
10 sachets laundry powder P 15 per sachet
1 sack rice P 1,800 per sack
10 cans sardines P 15 per can
10 chocolate bars P 15 per bar
5 notebooks P 25 per notebook

– Note: a. The chocolate bars were on consignment from Tsokolate-Ehstore.

b. Of the 5 notebooks inside the store, one used for listings of customer credit.

Report to Juana the balance of the merchandise inventory account of 2FM store.
#1 – How to do Analysis of Assets in the Balance
Sheet?
1.Fixed Assets Turnover Ratio = Net sales/Average Fixed
Assets.
2.Current Ratio = Current Assets/Current Liabilities.
3.Quick Ratio = Quick Assets/ Current Liabilities.
4.Debt to equity ratio =Long term debts/ Shareholders
equity.
5.Equity = Total Asset – Total Liabilities.