FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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ValuePlus, In., was organized several years ago to develop and market computer software programs. The company is small but growing, and you are considering the purchase of some of its ordinary
shares as an investment. the following data on the company is available for the past two years:
VALUEPLUS, INC.
Comparative Income Statement
For the Years Ended December 31, 2014 and 2013
2014
2013
P10,000,000
6,500,000
3,500,000
2,630,000
870,000
120,000
750,000
225,000
525.000
P7,500,000
4,500,000
3,000,000
2,280,000
720,000
120,000
600,000
180,000
P 420,000
Sales.....
Less cost of goods sold.
Gross margin..
Less operating expenses
Net operating income..
Less interest expense.
Net income before taxes
Less income taxes (30%).
Net income.
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Transcribed Image Text:ValuePlus, In., was organized several years ago to develop and market computer software programs. The company is small but growing, and you are considering the purchase of some of its ordinary shares as an investment. the following data on the company is available for the past two years: VALUEPLUS, INC. Comparative Income Statement For the Years Ended December 31, 2014 and 2013 2014 2013 P10,000,000 6,500,000 3,500,000 2,630,000 870,000 120,000 750,000 225,000 525.000 P7,500,000 4,500,000 3,000,000 2,280,000 720,000 120,000 600,000 180,000 P 420,000 Sales..... Less cost of goods sold. Gross margin.. Less operating expenses Net operating income.. Less interest expense. Net income before taxes Less income taxes (30%). Net income.
VALUEPLUS, INC.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2014 and 2013
2014
2013
P1,200,000
525,000
1.725.000
P 980,000
420,000
1400,000
Retained carmings, January 1 ..
Add net income (above).
Total.
Deduct cash dividends paid:
Preference dividends.
Ordinary dividends
Total dividends paid.
Retained earnings, December 31.
60,000
180.000
240,000
PL.485,000
60,000
140,000
200.000
P1.200.000
VALUEPLUS, INC.
Comparative Statement of Financial Position
December 31, 2014 and 2013
2014
2013
Assets
Current assets:
Cash
Accounts receivable, net.
Inventory
Prepaid expenses
Total current assets.
P 100,000
750,000
1,500,000
50.000
2,400,000
2,585.000
P4.985.000
P 200,000
400,000
600,000
50.000
1,250,000
2.700.000
P3.950.000
Plant and equipment, net.
Total assets.
Liabilities and Equity
Liabilities:
Current liabilities
Bonds payable, 12%.
Total liabilities.
Equity:
Preference shares, 8%, P10 par..
Ordinary shares, PS par.
Retained earnings.
Total equity.
Total liabilities and equity
P1,250,000
1.000.000
2,250.000
P 500,000
1.000.000
1.500,000
750,000
500,000
1.485.000
2.735.000
P4.985.000
750,000
500,000
1,200,000
2,450.000
P3,950.000
The president of ValusPlus, Inc, is very concensed. Salas increased by P25 million daring 2014, yat the company's net incoume increased by only P105,000. Also, the company's oparating expanses want up in 2014, aven though a major effort was
launcaed during the year to cut costs.
Requirements:
1. For botia 2013 and 2014, prepare the income statement and the statament of financial positicn in common-size form. (Round computations to cna decimal place.)
2 From your work in () abova, explain to tiae presidant nay the increase in profits was so small in 2014. Were any banefits realized fom the company's cost-cuting efforts? Explain.
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Transcribed Image Text:VALUEPLUS, INC. Comparative Retained Earnings Statement For the Years Ended December 31, 2014 and 2013 2014 2013 P1,200,000 525,000 1.725.000 P 980,000 420,000 1400,000 Retained carmings, January 1 .. Add net income (above). Total. Deduct cash dividends paid: Preference dividends. Ordinary dividends Total dividends paid. Retained earnings, December 31. 60,000 180.000 240,000 PL.485,000 60,000 140,000 200.000 P1.200.000 VALUEPLUS, INC. Comparative Statement of Financial Position December 31, 2014 and 2013 2014 2013 Assets Current assets: Cash Accounts receivable, net. Inventory Prepaid expenses Total current assets. P 100,000 750,000 1,500,000 50.000 2,400,000 2,585.000 P4.985.000 P 200,000 400,000 600,000 50.000 1,250,000 2.700.000 P3.950.000 Plant and equipment, net. Total assets. Liabilities and Equity Liabilities: Current liabilities Bonds payable, 12%. Total liabilities. Equity: Preference shares, 8%, P10 par.. Ordinary shares, PS par. Retained earnings. Total equity. Total liabilities and equity P1,250,000 1.000.000 2,250.000 P 500,000 1.000.000 1.500,000 750,000 500,000 1.485.000 2.735.000 P4.985.000 750,000 500,000 1,200,000 2,450.000 P3,950.000 The president of ValusPlus, Inc, is very concensed. Salas increased by P25 million daring 2014, yat the company's net incoume increased by only P105,000. Also, the company's oparating expanses want up in 2014, aven though a major effort was launcaed during the year to cut costs. Requirements: 1. For botia 2013 and 2014, prepare the income statement and the statament of financial positicn in common-size form. (Round computations to cna decimal place.) 2 From your work in () abova, explain to tiae presidant nay the increase in profits was so small in 2014. Were any banefits realized fom the company's cost-cuting efforts? Explain.
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