Malapit Company is a well-known laundry shop which was started and formed by the familywith a starting capital of Php 1,000,000.00. It's renting out 2 shops and has a total monthlyrental of Php 50,000.00. They are paying their employees' wages a total of Php 20,000.00monthly. The said laundry has a business vehicle worth Php 200,000.00 that is used as a deliveryservice. Currently, the Gross revenue is @ Php 200,000.00 monthly. After two years of operationthey want to open a new branch so they are planning to borrow Php 500,000.00 as additionalfunds from financial institution and use their business vehicles and laundry machines to serve asguaranty of payments to the said financial institution.1. Cite what are the cash inflow in the situation?2. Cite the cash outflow in the situation?3. What are the assets of the business?4. What are the collaterals that the financial institution is going to take if the businesswon't be able to pay its due?

Answered: Malapit Company is a well-known laundry…

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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Malapit Company is a well-known laundry shop which was started and formed by the family
with a starting capital of Php 1,000,000.00. It's renting out 2 shops and has a total monthly
rental of Php 50,000.00. They are paying their employees' wages a total of Php 20,000.00
monthly. The said laundry has a business vehicle worth Php 200,000.00 that is used as a delivery
service. Currently, the Gross revenue is @ Php 200,000.00 monthly. After two years of operation
they want to open a new branch so they are planning to borrow Php 500,000.00 as additional
funds from financial institution and use their business vehicles and laundry machines to serve as
guaranty of payments to the said financial institution.
1. Cite what are the cash inflow in the situation?
2. Cite the cash outflow in the situation?
3. What are the assets of the business?
4. What are the collaterals that the financial institution is going to take if the business
won't be able to pay its due?

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Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for you. To get remaining sub-part solved please repost the complete question and mention the sub-parts to be solved.

The income statement is prepared for firm in order to known the financial performance during the accounting period. However, income statement is prepared based on the accrual basis and there are various non-cash items which are also reported on income statement.

Therefore, sometime the income statement does not solve the purpose of assessing the performance of the business. In such cases, the cash flow statement provides the required information about the cash transaction during the period. Cash flow statement reports the inflow and outflow of cash during the accounting period.

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