AILEEN GRACE D.

CASAS
Morales Avenue, Koronadal City



NOTES TO FINANCIAL STATEMENTS
December 31, 2013


1 General

Aileen Grace and John Arnold Casas newly started business last year, 2012. With the
capital given by the parents, consisting of a commercial lot with building, they opened a
general merchandise at Morales Avenue, Koronadal City. Aileen Grace is a graduate of
Management and John Arnold, Marketing.

Their business is a grocery store, including rice wholesale and retail. They are the
wholesaler of soft drinks and beer. Also added to their gross sales is the wholesale of
ice cream cones.


2 Summary of Significant Accounting Policies

Basis of Preparation of Financial Statements
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles in the Philippines as set forth in the Philippine
Reporting Standards (PFRS).

The accounting policies have been consistent with those used in the previous
year.


3 Cash On Hand/In Bank

Cash on hand and cash in bank are cash and deposits in bank and other short-term,
highly liquid investments that are readily convertible to known amounts of cash with
original maturities of three months or less and are subject to insignificant risk of change in
value.

Cash on Hand and In Bank is the amount they set aside for the purchase of coke, pepsi,
RC Cole, San Mig beer, cobra and other similar drinks. The proprietor manages to purchase
merchandise on cash basis. Their weekly cash requirement on purchases averages Php
900,000.00 to Php 1,000,000.00 weekly.

With the collaterals, they decided to apply for a revolving credit line amounting to Php
500,000.00. This is in preparation for an increased cash requirement for the coming
Christmas season.

December 31, 2013

Cash on Hand/In Bank 1,006,866.83

4. Merchandise Inventory
This consists of rice, beer, soft drinks and grocery items on hand at the end of the
period. This is valued at cost.
December 31, 2013

Merchandise Inventory 215,875.00
-

5. Property and Equipment

Property and Equipment are stated at cost less accumulated depreciation and
amortization and any impairment in value.

The cost of an asset comprises its purchase price and other costs directly attributable in
bringing the asset to its working condition and location for its intended use.

Expenditures for all addition, improvements and renewals are capitalized; expenditures
for repairs and maintenance are charged to expense as incurred. When the assets are sold
or otherwise disposed of, their coast and related accumulated depreciation/amortization,
and impairment losses are removed from the fixed asset account and the resulting gain or
loss is reflected as income or loss for the period.

Depreciation and amortization is computed on a straight-line basis method over the
estimated useful lives of the assets as follows:

Building 30 years

Fully depreciated assets are retained in the accounts until they are no longer in use and no
further charge for depreciation is made with respect to those assets.

6. Current Liabilities is the proceeds of a revolving credit line from the LBP for
Php500,000.00. Interest is 12% per annum.

7. Gross Sales consists of all sales from grocery items, rice, soft drinks and beer and some
hard drinks.