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Exercise for Preparation of Financial Statements The following ledger balances were taken from the books of BMS Trading for the year ended December 31, 2011. Prepare the Income Statement, Statement of Changes in Owners Equity, Statement of Financial Position, Notes to the Financial Statements and Statement of Cash Flows. Accounts Payable CL Accounts Receivable CA Accumulated Depreciation- Building PPE Accumulated Depreciation- Office Equipment PPE Accumulated Depreciation- Furnitures & Fixtures PPE Advances to Employees CA Accrued Rent Expense CL Accrued Interest Income CA Allowance for Doubtful Accounts ca Cash CA Bonds Payable NCL Depreciation Expense Building PPE Discount Lost Doubtful Accounts Expense Freight-in Freight-out Furnitures & Fixtures PPE Gain on sale of office equipment Sy, Drawing Sy, Capital Interest Expense Interest Income Investments in Trading Securities CA Interest Receivable CA Land PPE Loss on Sale of Furniture and Fixture Merchandise Inventory, January 1, 2011 Merchandise Inventory, December 31, 2011 Mortgage Payable NCL Notes Payable CL Notes Receivable CA Office Equipment PPE 14, 100 50, 000 23, 400 55, 000 15, 000 20, 000 1, 100 3, 300 2, 300 ? 12, 500 3, 830 140, 000 250 2, 340 1, 550 690 65, 100 351 5, 400 130, 178 320 1, 000 51, 820 5, 300 300, 000 850 211, 021 137, 931 120, 000 50, 750 15, 800 72, 300
Office Supplies Expense Petty Cash CA Purchases Purchase Discounts Purchase Returns & Allowances Rent Expense Representation Expense Salaries and Wages Sales Sales Commission Sales Discounts Sales Returns & Allowances SSS & Medicare Premiums Expense SSS & Medicare Premiums Payable CL Supplies CA Taxes and Licenses Unearned Sales Income CL Unexpired Rent CA VAT Payable CL Withholding Taxes Payable CL Additional data:
1. Cash balance, January 1
520 3, 000 23, 000 3, 700 4, 000 25, 000 5, 000 52, 000 830, 000 35, 000 2, 000 2, 300 954 335 14, 000 23, 000 1, 750 15, 400 1, 150 850
50, 875
Cash flow information: Collection from Customers Collection of Interest Income Payment of loan Interest Proceeds of bank loan from BPI Interest received from cash deposited in the bank Interest paid on mortgage payable Withdrawal of owner Sale of Building Payment of operating expenses Purchase of additional computers to be used in the office
395, 780 1, 000 12, 000 100, 000 2, 570 5, 510 50, 700 200, 000 475, 340 90, 256
BMS Trading Income Statement For the Year Ended December 31, 2011 Note Net Sales 1 Cost of Sales 2 Gross Profit Other Income 3 Total Income Operating Expenses Administrative Expenses 4 Distribution Expenses 5 Other Expenses 6 Finance Cost (Interest Expense) Net Income
P 825, 700 (116, 760) P 708, 940 1, 351 P 710, 291 P 107, 644 40, 690 1, 100 320
BMS Trading Statement of Changes in Owners Equity For the Year Ended December 31, 2011 Sy, Capital January 1 Add: Net Income Sub-total Less: Sy, Drawing Sy, Capital
BMS Trading Statement of Financial Position December 31, 2011 ASSETS Current Assets Cash and Cash Equivalents Investments in Trading Securities Trade and Other Receivables Merchandise Inventory Prepaid Expenses Non-current Assets Property, Plant and Equipment TOTAL ASSETS Note 7 8 9 10 P 119, 419 51, 820 92, 100 111, 111 __29, 400_
LIABILITIES AND OWNERS EQUITY Current Liabilities Trade and other payables 11 Non-current Liabilities Mortgage Payable Bonds Payable Total Liabilities Owners Equity Sy, Capital TOTAL LIABILITIES AND OWNERS EQUITY
Notes to the Financial Statements Note 1 Net Sales Sales Less: Sales Discounts Sales Returns & Allowances Net Sales Note 2 Cost of Sales Merchandise Inventory, January 1
P 211, 021
Add: Net Cost of Purchases Purchases Less: Purchase Discounts P 3, 700 Purchase Returns & Allowances 4, 000 Net Purchases Add: Freight-in Cost of Goods Available for Sale Less: Merchandise Inventory, December 31 Cost of Sales Note 3 Other Income Gain on Sale of Office Equipment Interest Income Total Other Income
Note 4 Administrative Expenses Salaries and Wages Rent Expense Taxes and Licenses Depreciation Expense Doubtful Accounts Expense SSS & Medicare Premiums Expense Office Supplies Expense Total Administrative Expenses Note 5 Distribution Expenses Sales Commission Representation Expense Freight-out Total Distribution Expenses Note 6 Other Expenses Loss on Sale of Furniture and Fixture Discount Lost Total Other Expenses Note 7 Cash and Cash Equivalents Petty Cash Cash in Bank Total
P 52, 000 25, 000 23, 000 3, 830 2, 340 954 520 P 107, 644
Note 8 Trade and Other Receivables Accounts Receivable Less: Allowance for Doubtful Accounts Advances to Employees Notes Receivable Interest Receivable Accrued Interest Income Total Note 9 Prepaid Expenses Unexpired Rent Supplies Total Note 10 Property, Plant and Equipment Land Building Less: Accumulated Depreciation Office Equipment Less: Accumulated Depreciation Furnitures and Fixtures Less: Accumulated Depreciation Carrying Value Note 11 Trade and Other Payables Notes Payable Accounts Payable Unearned Sales Income VAT Payable Accrued Rent Expense Withholding Taxes Payable SSS & Medicare Premiums Payable Total
P 47, 700 20, 000 15, 800 5, 300 3, 300 P 92, 100
P 300, 000 P 140, 000 23, 400 P 72, 300 55, 000 P 65, 100 15, 000 116, 600 17, 300 50, 100 P 484, 000
P 50, 750 14, 100 1, 750 1, 150 1, 100 850 335 P 70, 035
BMS Trading Statement of Changes in Owners Equity For the Year Ended December 31, 2011 Cash Flows from Operating Activities Collection from Customers Interest received from cash deposited in the bank Collection of Interest Income Payment of operating expenses Payment of loan Interest Interest paid on mortgage payable Cash Flows from Investing Activities Sale of Building Purchase of additional computers to be used in the office Cash Flows from Investing Activities Proceeds of bank loan from BPI Withdrawal of owner P 100, 000 (50, 700) 49, 300 P 200, 000 (90, 256) 109, 744 P 395, 780 2, 570 1, 000 (475, 340) (12, 000) (5, 510) (P 93, 500)