ACC 221

COMPETENCY ASSESSMENT
2nd Semester, SY 2020-2021

Instructions:
1. Answer must be handwritten.
2. Use white ruled paper.
3. Use black ink pen.

The problem
The following accounts appear for Hopeful Company for 2020 and 2019:

2020 2019
Petty Cash Fund 84,000 84,000
Cash 1,634,880 1,238,400
Treasury Bill (90 days) 755,040 721,680
Accounts Receivable 3,486,480 3,127,008
Notes Receivable 1,200,000 1,200,000
Inventories 8,095,200 7,740,000
Prepaid Advertising 345,600 -
Prepaid Rent 396,000 -
Office Supplies Inventory 309,600 -
Land 2,400,000 2,400,000
Furniture and Equipment 2,508,000 2,508,000
Delivery Equipment 3,928,800 3,928,800
Leasehold Improvement 871,200 871,200
Other Assets 1,118,400 1,118,400
Sales Discounts 150,000 80,000
Sales Returns 120,000 75,000
Cost of Sales 6,940,800 4,560,000
Sales Salaries 1,032,000 1,224,000
Advertising Expense 240,000 240,000
Depreciation expense (60% admin. &40%dist.) 480,000 -
Office Salaries 240,000 840,000
Insurance expense 24,000 36,000
Repairs and Maintenance (charged to admin exp.) 31,680 120,000
Interest Expense 139,728 -
Income Tax Expense 1,028,160 -
37,559,568 32,112,488

Accumulated Depreciation 2,247,600 1,767,600

Accounts Payable 1,255,440 1,704,000
Notes Payable (due in 4 years) 11,040,000 11,040,000
Accrued Expenses 151,440 33,600
Income tax payable 1,028,160 936,000
Other current liabilities 210,480 160,800
Bonds Payable 2,880,000 2,880,000
Premium on Bonds Payable 57,600 62,400
Share Capital, P100 par 4,800,000 4,800,000
Share Premium 1,200,000 1,200,000
Retained Earnings - beg 353,088 2,046,000
 Sales 11,838,000 5,482,088
Royalty Income 497,760 -
37,559,568 32,112,488

Requirement: Prepare the following:

a. Statement of Financial Position (using Report Form)
b. Statement of Comprehensive Income (using functional approach)
c. Statement of Changes in Equity
d. Statement of Cash Flows
e. Notes to Financial Statements. Only the supporting information or computation for line items
presented in the financial statements. Provide a space of the other information. See sample
below:

NOTES TO FINANCIAL STATEMENTS

Statement of Compliance with PFRS

Summary of Significant Accounting Policies

Supporting Information
2021 2020
Note 1: Cash and Cash Equivalents
Petty Cash Fund Pxxx,xxx Pxxx,xxx
Cash

Other Disclosures

f.
HOPEFUL COMPANY
STATEMENT OF FINANCIAL POSITION
December 31, 2020 and 2019

ASSETS

Current Assets Note 2020 2019

Cash and Cash Equivalents 1 P 2,473,920 P 2,044,080
Trade and Other Receivables 2 4,686,480 4,327,008
Inventories 8,095,200 7,740,000
Prepayments 3 1,051,200 -
Total P16,306,800 P14,111,088

Non-Current Assets
Property, Plant and Equipment 4 P 7,460,400 P 7,940,400
Other Assets 1,118,400 1,118,400
Total P 8,578,800 P 9,058,800

TOTAL ASSETS P24,885,600 P23,169,888

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities
Current Liabilities
Trade and Other Payable 5 P 2,435,040 2,673,200
Other Current Liabilities 210,480 160,800
Total P 2,645,520 P 2,834,400
 Non-Current Liabilities 6 P 13,977,600 P13,982,400

Total Liabilities P 16,623,120 P16,816,800

Shareholders’ Equity

Share Capital, P100 par 4,800,000 4,800,000

Reserves 7 1,200,000 1,200,000
Retained Earnings – beg 8 353,088 P2,262,480

Total P8,262,480 P 6,353,088

TOTAL LIABILITES AND SHAREHOLDERS’ EQUITY P24,885,600 P23,169,888

HOPEFUL COMPANY
STATEMENT OF COMPREHENSIVE INCOME
For the Year Ended December 31, 2020 and 2019

Note 2020 2019

Net Sales 9 11,568,000 P5,327,088
Cost of Sales 6,940,800 4,560,000
Gross Profit P4,627,200 P 767,088
Other Revenue 10 497,760 -
Total Revenue P5,124,960 P 767,088
Operating Expenses
Distribution Expenses 11 P1,464,000 P1,464,000
General and Admin Expenses 12 583,680 996,000
Total P2,047,680 P2,460,000
Income from Operations P3,077,280 (1,692,912)
Finance Cost 139,728 -
Net Income before Tax P2,937,552 (1,692,912)
Income Tax Expense 1,028,160 -
Net Income P1,909,392 (1,692,912)

HOPEFUL COMPANY
STATEMENT OF CHANGES IN EQUITY
December 31, 2019

Share Capital Reserves Retained Earnings

Balances – January 1 P4,800,000 P1,200,000 P2,046,000
Comprehensive Income/Loss:
Net Loss _________ ________ (1,692,912)
Balances – December 31 P4,800,000 P1,200,000 P 353,088

HOPEFUL COMPANY
STATEMENT OF CHANGES IN EQUITY
December 31, 2020

Share Capital Reserves Retained Earnings

Balances – January 1 P4,800,000 P1,200,000 P353,088
Comprehensive Income:
Net Income _________ ________ 1,909,392
Balances – December 31 P4,800,000 P1,200,000 2,262,480
 HOPEFUL COMPANY
STATEMENT OF CASH FLOWS
December 31, 2020
Cash flow from operating activities:
Net income 1,909,392
Depreciation 480,000
Increase in AR (359,472)
Increase in Inventory (355,200)
Increase in prepayments (1,051,200)
Decrease in current liabilities ( 188,880)
Decrease in non current liabilities ( 4,800)
Net increase in cash 429,840
Add: cash, beg. 2,044,080
Cash, end 2,473,920

NOTES TO THE FINANCIAL STATEMENTS

Note 1: Cash and Cash Equivalents

2020 2019
Petty Cash Fund P 84,000 P 84,000
Cash 1,634,880 1,238,400
Treasury Bill 755,040 721,680
Total P2,473,920 2,044,080

Note 2: Trade and Other Receivables

2020 2019
Accounts Receivable P3,486,480 P3,127,008
Notes Receivable 1,200,000 1,200,000
Total P4,686,480 P4,327,008

Note 3: Prepayments
2020 2019
Prepaid Advertising P345,600 -
Prepaid Rent 396,000 -
Office Supplies Inventory 309,600 -
Total 1,051,200 -

Note 4: Property, Plant and Equipment

2020 2019
Land P2,400,000 P2,400,000
Furniture and Equipment 2,508,000 2,508,000
Delivery Equipment 3,928,800 3,928,800
Leasehold Improvement 871,200 871,200
Total P9,708,000 P9,708,000
Less: Accum. Depreciation 2,247,600 1,676,600
Net Book Value P7,460,400 P7,940,400

Note 5: Trade and Other Payable

2020 2019
Accounts Payable P1,255,440 P1,704,000
Accrued Expenses 151,440 33,600
Income tax payable 1,028,160 936,000
Total P2,435,040 P2,673,200
Note 6: Non-Current Liabilities
2020 2019
Notes Payable 11,040,000 11,040,000
Bonds Payable 2,880,000 2,880,000
Premium on Bonds Payable 57,600 62,400
Total 13,977,600 13,982,400

Note 7: Retained Earnings

2020 2019
RE, beg 353,088 2,046,000
Net income/Loss P1,909,392 (1,692,912)
Total P2,262,480 P353,088

Note 8: Reserves
2020 2019
Share Premium 1,200,000 1,200,000

Note 9: Net Sales

2020 2019
Gross Sales 11,838,000 5,482,088
Sales Discount ( 150,000 ) ( 80,000)
Sales returns ( 120,000 ) ( 75,000)
Net Sales 11,568,000 5,327,088

Note 10: Other Revenue

2020 2019
Royalty Income P497,760 -

Note 11: Distribution Expenses

2020 2019
Sales salaries 1,032,000 1,224,000
Advertising Expenses 240,000 240,000
Depreciation Expenses 192,000 -
Total 1,464,000 1,464,000

Note 12: General and Administrative Expenses

2020 2019
Office salaries P240,000 P840,000
Insurance expense 24,000 36,000
Depreciation expense 288,000
Repairs and Maintenance 31,680 120,000
Total P583,680 P996,000

2020 2019
BVPS SHE P 8,262,480 P 6,353,088
Ave. # of shares 48,000 48,000

172.14 132.36

EPS NI P1,909,392 (1,692,912)

Ave. # of shares 48,000 48,000

39.78 (35.27)