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made during the year are listed b book value of P86,000 will be solc ock of Ohio Company will be pany at a time when the market v o be given as part payment.

made during the year are listed b book value of P86,000 will be solc ock of Ohio Company will be pany at a time when the market v o be given as part payment.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Exercise 5-9 During the next fiscal year ending June 30. 2020, Texas Company will make substantial investments in new product lines and in a modernization program. Significant changes to be made during the year are listed below: 1. Equipment with a net book value of P86,000 will be sold during the year. 2. All of the capital stock of Ohio Company will be exchanged with 5,000 shares of Texas Company at a time when the market value is P40 per share. P250,000 cash will also be given as part payment. 3. Bonds having a face value of P1,000,000 will be issued on June 30, 2020 at 98%. 4. Trading securities carried at market value of P200,000 will be sold for P215,000. 5. New equipment will be purchased during the year. 6. A new building will be purchased at a cost of P1,000,000, although there are no building retirements. 7. Cash dividends will be paid to stockholders. The financial statements forccast for the year ended June 30, 2020 are given next page:
Transcribed Image Text:Exercise 5-9 During the next fiscal year ending June 30. 2020, Texas Company will make substantial investments in new product lines and in a modernization program. Significant changes to be made during the year are listed below: 1. Equipment with a net book value of P86,000 will be sold during the year. 2. All of the capital stock of Ohio Company will be exchanged with 5,000 shares of Texas Company at a time when the market value is P40 per share. P250,000 cash will also be given as part payment. 3. Bonds having a face value of P1,000,000 will be issued on June 30, 2020 at 98%. 4. Trading securities carried at market value of P200,000 will be sold for P215,000. 5. New equipment will be purchased during the year. 6. A new building will be purchased at a cost of P1,000,000, although there are no building retirements. 7. Cash dividends will be paid to stockholders. The financial statements forccast for the year ended June 30, 2020 are given next page:
186 Income Siatement For the Year Ended June 30, 2020 Net sales Cost of goods sold (including depreciation of P191,500, Operating expenses (including depreciation P2,430,500 P1,073,000 of P100,000) Interest expense 000 00 Gain on sale of equipment Gain on sale of trading securities Unrealized holding gain on trading securities 7,500 (26,000) (15,000) (44,000) 356,000 P1.851,500 P 579,000 Income tax Total Net income Texas Company Balance Sheets June 30 Assets 2020 2019 P442,000 325,000 P532,000 275,000 141,500 168,500 Cash Trading Securities(market) Accounts receivable 80,500 Inventories 450,000 43,000 Investment in Asseciates (cost) 321,500 242,500 P1,540,500 1,095,000 Buildings (net) Equipment (net) Total assets 352,000 P3,057,000 Liabilities & Equity P 93,500 P107,500 Accounts payable Short-term bank loans payable Accrued operating expensES Income tax payable Bonds payable (net) Common stock, P10 par value Additional paid in capital Retained earnings Total liabilities & equity 50,000 20,500 143,000 41,500 156,500 500,000 400,000 250,000 820,000 P3,057,000 435,000 P1,540,500 REQUIRED: 1. Prepare a forecast cash flow statement for the year ended June 30 2020
Transcribed Image Text:186 Income Siatement For the Year Ended June 30, 2020 Net sales Cost of goods sold (including depreciation of P191,500, Operating expenses (including depreciation P2,430,500 P1,073,000 of P100,000) Interest expense 000 00 Gain on sale of equipment Gain on sale of trading securities Unrealized holding gain on trading securities 7,500 (26,000) (15,000) (44,000) 356,000 P1.851,500 P 579,000 Income tax Total Net income Texas Company Balance Sheets June 30 Assets 2020 2019 P442,000 325,000 P532,000 275,000 141,500 168,500 Cash Trading Securities(market) Accounts receivable 80,500 Inventories 450,000 43,000 Investment in Asseciates (cost) 321,500 242,500 P1,540,500 1,095,000 Buildings (net) Equipment (net) Total assets 352,000 P3,057,000 Liabilities & Equity P 93,500 P107,500 Accounts payable Short-term bank loans payable Accrued operating expensES Income tax payable Bonds payable (net) Common stock, P10 par value Additional paid in capital Retained earnings Total liabilities & equity 50,000 20,500 143,000 41,500 156,500 500,000 400,000 250,000 820,000 P3,057,000 435,000 P1,540,500 REQUIRED: 1. Prepare a forecast cash flow statement for the year ended June 30 2020
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