Following are selected financial and operating data taken from the financial statements of Antiporda Corporation: As of December 31 2019 2020 Cash. ₱80,000 ₱640,000 Notes&Accounts receivable,net 400,000 1,200,000 Merchandise inventory 720,000 1,200,000 Marketable Securities-short term 240,000 80,000 Land and buildings(net) 2,720,000 2,880,000 Bonds payable-long term 2,160,000 2,240,000 Accounts payable-trade 560,000 880,000 Notes payable-short term 160,000 320,000 For the year ended December 31 2019 2020 Sales (20%cash, 80% credit sales) 18,400,000 19,200,000 Cost of goods sold 8,000,000 11,200,000 Compute the following ratios: 1. Current ratio as of December 31,2020. 2.Quick (acid test) ratio as of December 31,2020. 3. Accounts receivable turnover for 2020. 4. Merchandise inventory turnover for 2020. 5. The gross margin rate for 2019. 6. The average age of accounts receivable for 2020 (use 360 days).
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Following are selected financial and operating data taken from the financial statements of Antiporda Corporation:
As of December 31
2019 2020
Cash. ₱80,000 ₱640,000
Notes&
Merchandise inventory 720,000 1,200,000
Marketable Securities-short term 240,000 80,000
Land and buildings(net) 2,720,000 2,880,000
Bonds payable-long term 2,160,000 2,240,000
Accounts payable-trade 560,000 880,000
Notes payable-short term 160,000 320,000
For the year ended December 31
2019 2020
Sales (20%cash, 80% credit sales) 18,400,000 19,200,000
Cost of goods sold 8,000,000 11,200,000
Compute the following ratios:
1.
2.Quick (acid test) ratio as of December 31,2020.
3. Accounts receivable turnover for 2020.
4. Merchandise inventory turnover for 2020.
5. The gross margin rate for 2019.
6. The average age of accounts receivable for 2020 (use 360 days).
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