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Problem Solving Chapter 7

The document contains financial statements for Garcia's Health Care, Inc. for years ending December 31, 20X4 and 20X5. It includes statements of financial position, income, cash flows, and retained earnings. The statements of financial position show total assets increased from ₱7,889 million in 20X4 to ₱9,154 million in 20X5. Total liabilities and equity also increased over the same period. The income statement indicates net income grew from ₱1,105 million in 20X4 to ₱1,327 million in 20X5.

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Kevin TW Sales
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365 views3 pages

Problem Solving Chapter 7

The document contains financial statements for Garcia's Health Care, Inc. for years ending December 31, 20X4 and 20X5. It includes statements of financial position, income, cash flows, and retained earnings. The statements of financial position show total assets increased from ₱7,889 million in 20X4 to ₱9,154 million in 20X5. Total liabilities and equity also increased over the same period. The income statement indicates net income grew from ₱1,105 million in 20X4 to ₱1,327 million in 20X5.

Uploaded by

Kevin TW Sales
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Problem 6

20X3 20X4
Liabilities and Equity
Current liabilities:
Accrued wages and taxes ₱ 15 ₱ 17
Accounts payable ₱ 50 ₱ 56
Notes payable ₱ 45 ₱ 45
Total ₱ 110 ₱ 118

Problem 7
Garcia's Health Care, Inc.
Statement of Financial Position as of December 31, 20X4 and 20X5
(In million of pesos)

20X4 20X5
Assets
Current Assets:
Cash and marketable securities ₱ 395 ₱ 421
Accounts Receivable ₱ 1,020 ₱ 1,109
Inventory ₱ 1,581 ₱ 1,760
Total ₱ 2,996 ₱ 3,290
Fixed Assets:
Gross plant and equipment ₱ 4,743 ₱ 5,812
Less: Depreciation ₱ 640 ₱ 840

Net plant and equipment ₱ 4,103 ₱ 4,972


Other long-term assets ₱ 790 ₱ 892
Total ₱ 4,893 ₱ 5,864

Total Assets ₱ 7,889 ₱ 9,154

Liabilities and Equity


Accrued wages and taxes ₱ 242 ₱ 316
Accounts payable ₱ 791 ₱ 867
Notes payable ₱ 714 ₱ 872
Total ₱ 1,747 ₱ 2,055
Long-term debt: ₱ 3,005 ₱ 3,090
Stockholders equity:
Preferred stock (25 million shares) ₱ 60 ₱ 60
Common stock and paid-in
Surplus (200 million shares) ₱ 637 ₱ 637
Retained earnings ₱ 2,440 ₱ 3,312
Total ₱ 3,137 ₱ 4,009

Total liabilities and equity ₱ 7,889 ₱ 9,154


Garcia's Health Care, Inc.
Income Statement for Years Ending December 31, 20X4 and 20X5
(In million of pesos)

20X4 20X5
Net sales ₱ 4,348 ₱ 4,980
Less: Cost of goods sold ₱ 2,135 ₱ 2,371
Gross profits ₱ 2,213 ₱ 2,609
Less: Depreciation ₱ 191 ₱ 200
Earnings before interest and taxes (EBIT) ₱ 2,022 ₱ 2,409
Less: Interest ₱ 285 ₱ 315
Earnings before taxes (EBT) ₱ 1,737 ₱ 2,094
Less: Taxes ₱ 632 ₱ 767
Net income ₱ 1,105 ₱ 1,327
Less: Preferred stock dividends ₱ 60 ₱ 60
Net income available to common stockholders ₱ 1,045 ₱ 1,267
Less: Common stock dividends ₱ 395 ₱ 395
Addition to retained earnings ₱ 650 ₱ 872
Per (common) share data:
Earnings per share (EPS) ₱ 5,225 ₱ 6,335
Dividends per share (DPS) ₱ 1,975 ₱ 1,975
Book value per share ₱ 39,445 ₱ 45,770
Market value (price) per share (MVPS) ₱ 22,500 ₱ 26,850

Garcia's Health Care, Inc.


Statement of Cash Flows for Years Ending December 31, 20X5
(In million of pesos)

20X5
A. Cash flows from operating activities
Net income ₱ 1,327
Additions (sources of cash):
Depreciation ₱ 200
Increase accrued wages and taxes ₱ 74
Increase in accounts payable ₱ 76

Subtractions (uses of cash):


Increase in accounts receivable ₱ (89)
Increase in inventory ₱ (179)
Net cash flow from operating activities ₱ 1,409

B. Cash flows from investing activities


Subtractions: ₱ (1,069)
Increase fixed assets ₱ 1,069
Increase in other long-term assets ₱ 102
Net cash flow form investing activities ₱ 1,171

C. Cash flows from financing activities


Additions:
Increase in notes payable ₱ 158
Increase in long-term debt ₱ 85
Increase in common and preferred stock ₱ -
Subtractions:
Pay dividends -(60+395) or -455
Net cash flow from financing activities ₱ (212)

D. Net change in cash and marketable securities ₱ (26)

Garcia's Health Care, Inc.


Statement of Retained Earnings as of December 31, 20X5
(In million of pesos)

20X5
Balance of retained earnings, December 31, 20X4 ₱ 2,440
Plus: Net income for 20X5
Less: Cash dividends paid
Preferred stock ₱ 60
Common stock ₱ 395
Total cash dividends paid ₱ 455
Balance of retained earnings, December 31, 20X5 ₱ 3,312

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