QUIZ 1 - PREPARATION OF FINANCIAL STATEMENTS

Castor , Arenas and Laurente, who are partners in the Super Manila Novelty Store, share profits
in the ratio of 30:20:50. The adjusted account balances of the partnership on December 31, 20A
follows:
Cash P 110,000
Accounts Receivable 80,000
Merchandise Inventory 800,000
Prepaid Rent 20,000
Prepaid Insurance 15,000
Accounts Payable 50,000
Notes Payable 115,000
Castor , Capital 125,000
Arenas, Capital 275,000
Laurente, Capital 110,000
Sales 2,500,000
Cost of Sales 1,450,000
Salaries Expense 450,000
Rent Expense 200,000
Insurance Expense 30,000
Utilities Expense 20,000

Required:

1. Prepare the 20A statement of comprehensive income. Show the division of profit at the
lower portion of the statement.

Super Manila Novelty Store

Comprehensive Income Statement
For the Year Ended December 31, 20A

Sales P 2,500,000
Cost of Sales 1,450,000
Gross Profit 1,050,000
Less: Operating Expenses
Salaries Expense 450,000
Rent Expense 200,000
Insurance Expense 30,000
Utilities Expense 20,000
Net Profit P 350,000

Partners
Total Castor Arenas Laurente
Profit divided 30:20:50
Castor (P350,000 x 3/10) P 105,000 P 105,000
Arenas (P350,000 x 2/10) P 70,000 P 70,000
Laurente (P350,000 x 5/10) P 175,000 P 175,000
Profit as distributed P 350,000 P 105,000 P 70,000 P 175,000
 2. Prepare the statement of changes in partners’ equity for 20A. Assume the following
additional information:
Capital Accounts, Investments during Withdrawals during
Jan. 1, 20A the year the year
Castor P75,000 P50,000 -0-
Arenas 300,000 25,000 P50,000
Laurente 150,000 -0- 40,000

Super Manila Novelty Store

Statement of Changes in Partner's Equity
For Year Ended Dec. 31, 20A
Castor Arenas Laurente
Original Investments P 75,000 P 300,000 P 150,000
Add: Additional Investments 50,000 25,000 -
Total P 125,000 P 325,000 P 150,000
Less: Withdrawals - 50,000 40,000
Balances P 125,000 P 275,000 P 110,000
Add: Profit 105,000 70,000 175,000
Partner's Equity, Dec. 31 P 230,000 P 345,000 P 285,000

3. Prepare the statement of financial position as at Dec. 31, 20A.

Super Manila Novelty Store

Statement of Financial Position
As of December 31, 20A

Assets
Current Assets:
Cash P 110,000
Accounts Receivable 80,000
Merchandise Inventory 800,000
Prepaid Rent 20,000
Prepaid Insurance 15,000
Total Assets P 1,025,000

Liabilities and Partners' Equity

Current Liabilities:
Accounts payable P 50,000
Notes Payable 115,000
Total Liabilities P 165,000

Partners' Equity:
Castor, Capital 230,000
Arenas, Capital 345,000
Laurente, Capital 285,000
Total Partner's Equity P 860,000
Total Liabilities & Partners' Equity P 1,025,000
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