Lakeside Company

Income Statement

For Year Ending December 31, 2018

Company Stores Distributorship Lakeside Totals

Sales 132,900,000 156,000,000 288,900,000

Sales, Returns, and Discounts (8,400,000) (11,650,000) (20,050,000)
Net Sales 124,500,000 144,350,000 268,850,000
Cost of Goods Sold (80,400,000) (91,350,000) (171,750,000)
Gross Profit 44,100,000 53,000,000 97,100,000
Salaries, Commissions, Bonuses (32,050,000) (19,000,000) (51,050,000)
Advertising and Selling Expenses (4,450,000) (6,350,000) (10,800,000)
Rent Expense (6,050,000) (1,250,000) (7,300,000)
(1,700,000) (600,000) (2,300,000)
Depreciation Expense
(5,100,000) (4,650,000) (9,750,000)
Other General and Administrative Exp.
(3,500,000) (2,200,000) (5,700,000)
Interest Expense
(8,750,000) 18,950,000 10,200,000
Income (Loss) Before Income Taxes
3,500,000 (7,600,000) (4,100,000)
Income Taxes
Net Income (Loss) (₱5,250,000) 6,100,000
₱11,350,000 12,850,000
(3,350,000)
Retained Earnings, January 1, 2018 ₱15,600,000

Cash Dividends
Retained Earnings, December 31, 2018

For Year Ending December 31, 2017

Company Stores Distributorship Lakeside Totals

Sales 126,300,000 132,300,000 258,600,000

Sales Returns and Discounts (6,550,000) (9,700,000) (16,250,000)
Net Sales 119,750,000 122,600,000 242,350,000
Cost of Goods Sold (75,900,000) (78,300,000) (154,200,000)
Gross Profit 43,850,000 44,300,000 88,150,000
Salaries, Commissions, Bonuses (29,050,000) (16,750,000) (45,800,000)
Advertising and Selling Expenses (4,550,000) (5,600,000) (10,150,000)
Rent Expense (4,800,000) (900,000) (5,700,000)
(1,650,000) (600,000) (2,250,000)
Depreciation Expense
(4,050,000) (4,650,000) (8,700,000)
Other General and Administrative Exp.
(2,600,000) (1,750,000) (4,350,000)
(2,850,000) 14,050,000 11,200,000
1,150,000 (5,600,000) (4,450,000)
 Interest Expense
Income (Loss) Before
Income Taxes
Income Taxes
Net Income (Loss) (₱1,700,000) 6,750,000
₱8,450,000 9,650,000
(3,550,000)
Retained Earnings, January 1, 2017 ₱12,850,000
Cash Dividends
Retained Earnings, December 31, 2017

Lakeside Company
Balance Sheet

Assets

Current Assets December 31, 2017 December 31, 2018

Cash 3,400,000 3,550,000
Accounts Receivables - Distributorship 14,650,000 19,400,000
Allowance for Doubtful Accounts (950,000) 13,700,000 (1,200,000) 18,200,000

Inventory - FIFO costing; Lower of

Cost or Market 39,300,000 47,300,000

Total Current Assets 56,400,000 69,050,000

Land, Buildings, and Equipment
Land 7,450,000 7,450,000
Buildings and Equipment 16,850,000 17,400,000
Accumulated Depreciation (7,150,000) 9,700,000 (8,950,000) 8,450,000

Total Land, Buildings, and Equipment 17,150,000 15,900,000

Intangible Assets
Leasehold Improvements 10,400,000 10,550,000
Accumulated Depreciation (4,300,000) 6,100,000 (4,800,000) 5,750,000
TOTAL ASSETS ₱79,650,000 ₱90,700,000

Liabilities and Shareholders’ Equity

Current Liabilities
Notes Payable - Current 1,000,000 1,000,000
Notes Payable - Trade 27,450,000 34,800,000
Accounts Payable - Cypress 7,800,000 8,300,000
Accrued Expenses and Taxes Payable 5,300,000 6,750,000
 Total Current Liabilities 41,550,000 50,850,000

Notes Payable - Long Term 17,750,000 16,750,000

Total Liabilities 59,300,000 67,600,000

Stockholder's Equity
Common Stock - 10,000 shares issued and
outstanding, ₱50 Par Value 500,000 500,000
Additional Paid-In Capital 7,000,000 7,000,000
Retained Earnings 12,850,000 15,600,000
Total Stockholder's Equity 20,350,000 23,100,000
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY ₱79,650,000 ₱90,700,000

Lakeside Company
Statement of Cash Flows

Year Ending Year Ending

December 31, 2017 December 31, 2018

Cash Flows From Operating Activities:

Received Cash from Customers 240,550,000 264,350,000
Paid Cash for Goods to be Sold (150,800,000) (171,900,000)
Paid Cash for Selling Expenses (10,150,000) (10,800,000)
Paid Cash for General and
Administrative Expenses (63,850,000) (67,150,000)
Paid Cash for Interest (4,350,000) (5,700,000)
Paid Cash for Taxes (4,300,000) 7,100,000 (3,600,000) 5,200,000

Cash Flows From Investing Activities:

Acquired Additional Land, Building,
and Equipment (1,600,000) (550,000)
Acquired Additional Leasehold Improvements (850,000) (2,450,000) (150,000) (700,000)
Cash Flows From Financing Activities:
Paid Current Note Payable (1,000,000) (1,000,000)
Paid Cash Dividend (3,550,000) (4,550,000) (3,350,000) (4,350,000)

Net Increase in Cash ₱100,000 ₱150,000

Schedule of Noncash Financing

and Investing Activities:
Note Payable Signed to Finance
Construction of New Store ₱7,700,000 ₱0

National Federation of American Businesses Study of Annual Reports

Fiscal Years Ending Between April 1, 2018 and March 1, 2019

Audio Equipment Audio Equipment

Retail Stores Distributorships

Common Size Statements

Sales 100% 100%

Sales Returns and Discounts 5% 9%

Cost of Goods Sold 58% 55%

Salary and Commission Expenses 16% 11%

Advertising and Selling Expenses 5% 6%

Rent Expense 4% 1%
 Depreciation Expense
2%

2%

Other General and Administrative

Expenses 3% 5%

Interest Expense 3% 1%

Net Income Before Taxes 4% 10%

Debt/Equity Ratio 2.0 1.4

Current Ratio 1.9 1.6

Inventory Turnover 3.9 4.6

Average Age-Trade Receivables (days) 34.2 46.9

Sales/Working Capital 9.5 10.8

Lakeside Company Trial Balance – General Ledger (Prepared by Client)

Account September 30, 2018 September 30, 2019 Numbers Accounts Debit
Credit Debit Credit

100-1 Cash-General 1,430,000 1,310,000

100-2 Cash-Payroll - -
 100-3 Cash-Restricted
1,875,000
2,125,000
101-1 Receivables-
Distributorship 16,465,000
21,370,000
101-2 Allowance for Doubtful Accounts 420,000 215,000
102-1 Inventory-Warehouse 32,125,000 38,110,000
103-1 Inventory-Store 1 1,665,000 1,940,000
103-2 Inventory-Store 2 1,135,000 1,720,000
103-3 Inventory-Store 3 1,990,000 3,020,000
103-4 Inventory-Store 4 855,000 1,230,000
103-5 Inventory-Store 5 1,745,000 1,705,000
103-6 Inventory-Store 6 1,095,000 1,245,000
110-1 Land 7,450,000 7,450,000
111-1 Building-Warehouse/Office 8,175,000 8,175,000
111-6 Building-Store 6 6,420,000 6,420,000
Accumulated Depreciation-
112-1 Warehouse/Office 5,650,000 6,280,000
112-6 Accumulated Depreciation-Store 6 1,480,000 1,770,000
115-1 Equipment 1,445,000 1,555,000
116-1 Accumulated Depreciation-Equipment 610,000 830,000
120-1 Trucks and Vehicles 1,360,000 1,360,000
Accumulated Depreciation-Trucks and
121-1 Vehicles 905,000 1,125,000
125-1 Leasehold Improvements 10,550,000 10,550,000
126-1 Accumulated Depreciation-Leasehold
Improvements 4,700,000 5,250,000
200-1 Bank Credit Line-Federal First Bank 20,905,000 20,590,000
200-2 Bank Credit Line-Security National Bank 16,205,000 18,905,000
210-1 Accounts Payable-Cypress 8,080,000 10,335,000
220-1 Accrued Expenses Payable - -
220-2 Income Taxes Payable - -
220-3 Payroll Taxes Payable 205,000 310,000
220-4 Sales Taxes Payable 930,000 1,010,000
230-1 Estimated Bonus Liability 300,000 975,000
240-1 Notes Payable-Current 1,000,000 1,000,000
240-2 Notes Payable-Long-Term 17,000,000 19,500,000
300-1 Common Stock 500,000 500,000
310-1 Additional Paid-In Capital 7,000,000 7,000,000
400-1 Retained Earnings 12,850,000 15,600,000
410-1 Dividends 2,435,000 1,570,000

Continued
 Account

September 30,
2018
September 30, 2019 Numbers Accounts Debit Credit
Debit Credit

500-1 Sales-Store 1 13,675,000 15,995,000

500-2 Sales-Store 2 19,890,000 19,945,000
500-3 Sales-Store 3 11,805,000 22,940,000
500-4 Sales-Store 4 12,115,000 13,270,000
500-5 Sales-Store 5 18,650,000 18,230,000
500-6 Sales-Store 6 5,540,000 6,060,000
510-1 Sales-District A 16,210,000 18,405,000
510-2 Sales-District B 20,740,000 22,200,000
510-3 Sales-District C 19,625,000 20,785,000
510-4 Sales-District D 16,540,000 20,240,000
510-5 Sales-District E 16,940,000 17,260,000
510-6 Sales-District F 21,220,000 23,495,000
520-1 Sales Returns-Stores 5,020,000 8,670,000
500-2 Sales Returns-Distributorship 7,785,000 11,600,000
525-1 Discounts-Distributorship 780,000 740,000
550-1 Cost of Goods Sold-Store 1 8,130,000 9,265,000
550-2 Cost of Goods Sold-Store 2 11,965,000 11,420,000
550-3 Cost of Goods Sold-Store 3 6,910,000 11,550,000
550-4 Cost of Goods Sold-Store 4 6,860,000 7,620,000
550-5 Cost of Goods Sold-Store 5 11,450,000 10,900,000
550-6 Cost of Goods Sold-Store 6 3,405,000 3,690,000
555-1 Cost of Goods Sold-Distributorship 64,420,000 70,455,000
580-1 Salary Expense-Store 1 2,260,000 2,560,000
580-2 Salary Expense-Store 2 2,960,000 2,965,000
580-3 Salary Expense-Store 3 1,965,000 2,020,000
580-4 Salary Expense-Store 4 1,930,000 2,060,000
580-5 Salary Expense-Store 5 2,740,000 2,755,000
580-6 Salary Expense-Store 6 1,615,000 1,610,000
585-1 Estimated Bonus Expense 300,000 975,000
590-1 Sales Commission-District A 930,000 1,045,000
590-2 Sales Commission-District B 1,195,000 1,270,000
590-3 Sales Commission-District C 1,130,000 1,180,000
590-4 Sales Commission-District D 950,000 1,350,000
590-5 Sales Commission-District E 975,000 970,000
590-6 Sales Commission-District F 1,220,000 1,330,000
595-1 Administrative and Warehouse Sales 13,770,000 15,180,000
598-1 Payroll Taxes Expense 2,035,000 2,245,000
600-1 Advertising Expense-Stores 3,335,000 3,210,000
600-2 Advertising Expense-Distributorship 455,000 375,000
 605-1 Travel Expenses-
Salesmen 3,310,000

3,745,000

Continued

Account September 30, 2018 September 30, 2019 Numbers

Accounts Debit Credit Debit Credit

610-0 Freight-Out 990,000 1,265,000

615-1 Rent Expense-Stores 5,260,000 5,735,000 615-2 Rent Expense-Vehicles 880,000 780,000 615-3 Rent Expense-
Equipment 305,000 235,000 616-1 Intracompany Rent Charge-Store 6 600,000 600,000 620-1 Depreciation Expense
1,895,000 1,910,000 625-1 Computer and Accounting Services 510,000 630,000 630-1 Legal and Auditing Expenses 535,000
455,000 640-1 Repairs and Maintenance 955,000 2,445,000 645-1 Supplies Expense 255,000 215,000 650-1 Utilities
Expense 2,230,000 1,820,000
660-1 Bad Debt Expense - -
670-1 Property Tax Expense 655,000 1,055,000 680-1 Other Miscellaneous Expenses 1,995,000 1,680,000
690-1 Interest Expense 4,060,000 4,455,000 695-1 Income Tax Expense 3,750,000 4,600,000
800-1 Gain on Disposition of Fixed Assets 700,000

TOTALS 292,290,000 292,290,000 331,105,000 331,105,000