Case 1
Comparative financial statements for Butter Cookies for the fiscal year ending December 31 appear below. The company did not issue any new ordinary or preference share during the year. A total of 600 thousand ordinary shares were outstanding. The interest rate on the bonds payable was 14%, the income tax was 40%, and the dividend per ordinary share was P0.75. The market value of the company’s ordinary share at the end of the year was P26. All of the company’s sales are on account.
Butter Cookies
Comparative Balance Sheet
(pesos in thousands) This Year Last Year
Assets
Current assets: Cash P 1,080 P 1,210 Accounts Receivable, net 9,000 6,500 Inventory 12,000 10,600 Prepaid expenses 600 500
Total current assets 22,680 18,810
Property and equipment: Land 9,000 9,000 Buildings and equipment, net 36,800 38,000
Total Property and equipment 45,800 47,000
Total Assets P68,480 P65,810
Liabilities and Shareholder’s Equity
Current Liabilities: Accounts payable P18,500 P17,400 Accrued payable 900 700 Notes payable, short term - 100
Total Current liabilities 19,400 18,200
Long-term liabilities: Bonds payable 8,000 8,000
Total Liabilities 27,400 26,200
Shareholder’s equity Preference shares 1,000 1,000 Ordinary shares 2,000 2,000 Additional paid-in capital 4,000 4,000 Total paid-in capital 7,000 7,000 Retained Earnings 34,080 32,610
Total shareholders’ equity 41,080 39,610
Total Liabilities and shareholders’ equity 68,480 65,810

Butter Cookies
Comparative Income Statements and Reconciliation
(pesos in thousands)