During the next fiscal year endìng June 30, 2020, Texas Company will make tantial 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. 1. Cash dividends wil! be paid to stockholders. The financial statements forecast for the year ended June 30, 2020 are given next page:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Significant changes to be made during the year are listed below:
substantial investments in new product lines and in a modernization program,
During the next fiscal year ending June 30, 2020, Texas Company will nake
Sienificant changes to be made during the year are listed below:
L 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.
1. Cash dividends wil! be paid to stockholders.
The financial statements forecast for the vear ended June 30, 2020 are given
next page:
Transcribed Image Text:Significant changes to be made during the year are listed below: substantial investments in new product lines and in a modernization program, During the next fiscal year ending June 30, 2020, Texas Company will nake Sienificant changes to be made during the year are listed below: L 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. 1. Cash dividends wil! be paid to stockholders. The financial statements forecast for the vear ended June 30, 2020 are given next page:
Income Siatement
For the Year Ended June 30, 2020
Net sales
Cost of gonds sold (including depreciation
of P191,500,
Operating expenses (including depreciation
P2,430,500
P1,073,000
of P100,000)
Interest expense
Gain on sale of equipment
Gain on sale of trading securities
Unrealized holding gain on trading securities
500,000
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
Cash
P532,000
275,000
Trading Securities(market)
Accounts receivable
Inventories
80,500
141,500
168,500
450,000
43,000
86,000
Investment in Associates (cost)
Land
43,000
321,500
Buildings (net)
Equipment (net)
Total assets
1,095,000
352,000
P3,057,000
242,500
P1,540,500
Liabilities & Equity
P 93,500
P107,500
50,000
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
980,000
41,500
156,500
550,000
500,000
400,000
250,000
820,000
P3,057,000
435,000
P1,540,500
REQUIRED:
a forccast cash flow statement for the vear ended June 30,
** 1ow supporting schedules or T-accounts for many missing amounts.
Transcribed Image Text:Income Siatement For the Year Ended June 30, 2020 Net sales Cost of gonds sold (including depreciation of P191,500, Operating expenses (including depreciation P2,430,500 P1,073,000 of P100,000) Interest expense Gain on sale of equipment Gain on sale of trading securities Unrealized holding gain on trading securities 500,000 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 Cash P532,000 275,000 Trading Securities(market) Accounts receivable Inventories 80,500 141,500 168,500 450,000 43,000 86,000 Investment in Associates (cost) Land 43,000 321,500 Buildings (net) Equipment (net) Total assets 1,095,000 352,000 P3,057,000 242,500 P1,540,500 Liabilities & Equity P 93,500 P107,500 50,000 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 20,500 143,000 980,000 41,500 156,500 550,000 500,000 400,000 250,000 820,000 P3,057,000 435,000 P1,540,500 REQUIRED: a forccast cash flow statement for the vear ended June 30, ** 1ow supporting schedules or T-accounts for many missing amounts.
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