Balance Sheet Accounts Income Statement Accounts: APPENDIX A: Company Chart of Accounts

Pre-LOB Project: A Journal of My Own Business | Cris Galang
APPENDIX A: Company Chart of Accounts
Balance Sheet Accounts Income Statement Accounts

Assets Cash Revenues Service Income
Accounts Receivable Other Income
Prepaid Expenses
Rental Deposit Expenses Salaries, Wages, Allowances
Saloon Equipment Social Security Premiums
Accumulated Depreciation - Saloon Equipment Medical Premiums
Office Equipment Training Expense
Accumulated Depreciation - Office Equipment Rent Expense
Funitures and Fixtures Taxes, Licenses and Fees
Accumulated Depreciation - Funitures and Fixtures Saloon Supplies Expense
Linens Transportation Expense
Accumulated Depreciation - Linens Communication Expense
Electricity and Water
Liabilities Accounts Payable Interest Expense
Loans Payable Bank Service Charges
Withholding Taxes Payable Depreciation - Saloon Equipment
Medical Premium Payable Depreciation - Office Equipment
Social Security Premium Payable Depreciation - Furniture and Fixtures
Accrued Expenses Depreciation - Linens
Miscellaneous Expenses
Equity Owner's Capital
Owner's Drawing
Profit and Loss Summary Account
THE SPAZ
Unadjusted General Journal
31-Jul-16
Date Account Titles and Explanation Debit Credit
1-Jul Cash ₱ 10,000,000.00
Owner's Capital ₱ 10,000,000.00
Initial capital for business.
2-Jul Taxes, Licenses and Fees ₱ 5,000.00
Cash ₱ 5,000.00
Paid for local Business Permits.
Taxes, Licenses and Fees ₱ 2,000.00
Cash ₱ 2,000.00
Paid for local Business Name Registration.
Rent Expense ₱ 100,000.00
Cash ₱ 100,000.00
Paid for one (1) month's rent.
Rental Deposit ₱ 100,000.00
Cash ₱ 100,000.00
Paid for rent deposit equal to a month's rent.
3-Jul Saloon Equipment ₱ 500,000.00
Cash ₱ 500,000.00
Bought various equipment for business.
Linens ₱ 26,000.00
Cash ₱ 26,000.00
Bought linens - towels, sheets, robes, blankets, etc.
Furnitures and Fixtures ₱ 260,000.00
Cash ₱ 130,000.00
Accounts Payable ₱ 130,000.00
Bought furnishings for business. 50% is on credit due in 15 days.
Prepaid Expense ₱ 15,000.00
Cash ₱ 15,000.00
Bought a month's worth of supplies for saloon use. - oils, lotions,etc.
Office Equipment ₱ 80,000.00
Bought two (2) desktop computers on credit. Due in 60 days.
4-Jul Cash ₱ 7,500.00
Service Income ₱ 7,500.00
Revenue for services provided.
Unadjusted Journal
15-Jul Cash ₱ 120,000.00

Revenue for services provided from July 5 to 15.
Salaries, Wages and Allowances ₱ 85,500.00
Cash ₱ 85,500.00
Employee salaries from July 1 to 15 without deductions.
Cash ₱ 20,000.00
Employee Living Allowances for July.
18-Jul Prepaid Expense ₱ 20,000.00
Cash ₱ 20,000.00
Bought additional supplies for saloon use.
Cash ₱ 130,000.00
Paid remaining amount owed for Furnishings bought on Jul 3.
20-Jul Training Expense ₱ 4,400.00
Cash ₱ 4,400.00
Paid for massage training for two (2) masseurs.
21-Jul Cash ₱ 195,000.00
Bank Service Charges ₱ 5,000.00
Loans Payable ₱ 200,000.00
Loan from Bank of the Philippine Islands (BPI)
22-Jul Linens ₱ 45,000.00
Bought additional linens on 30-day credit.
25-Jul Cash ₱ 188,800.00
26-Jul Accounts Receivable ₱ 12,000.00
Revenue for services provided on credit.
30-Jul Communication Expense ₱ 1,410.00
Cash ₱ 1,410.00
Communication costs for July.
Electricity and Water ₱ 7,580.00
Cash ₱ 7,580.00
Electricity costs for July.
Cash ₱ 1,250.00
Water costs for July.
Unadjusted Journal
31-Jul Cash ₱ 60,500.00

Cash ₱ 2,800.00
Accounts Receivable ₱ 2,800.00
Partial payment received from customer payables.
Social Security Premiums ₱ 1,710.00
Medical Premiums ₱ 1,710.00
Withholding Taxes Payable ₱ 4,275.00
Social Security Premium Payable ₱ 3,420.00
Medical Premium Payable ₱ 3,420.00
Cash ₱ 77,805.00
Employee salaries from July 15 to 31 with deductions.
Company co-pay for Social Security and Medical Premiums included.
₱ 12,083,660.00 ₱ 12,083,660.00
Unadjusted Journal
THE SPAZ
The Ledger
Asset Accounts Liability and Equity Accounts
Cash Owner's Capital
Bal. Date Debit Date Credit Date Debit Date Credit Bal.
₱ 9,348,655.00 1-Jul ₱ 10,000,000.00 2-Jul ₱ 5,000.00 1-Jul ₱ 10,000,000.00 -₱ 10,000,000.00
4-Jul ₱ 7,500.00 2-Jul ₱ 2,000.00
15-Jul ₱ 120,000.00 2-Jul ₱ 100,000.00
21-Jul ₱ 195,000.00 2-Jul ₱ 100,000.00 Taxes, Licenses and Fees
25-Jul ₱ 188,800.00 3-Jul ₱ 500,000.00 Bal. Date Debit Date Credit
31-Jul ₱ 60,500.00 3-Jul ₱ 26,000.00 ₱ 7,000.00 2-Jul ₱ 5,000.00
31-Jul ₱ 2,800.00 3-Jul ₱ 130,000.00 2-Jul ₱ 2,000.00
3-Jul ₱ 15,000.00
15-Jul ₱ 85,500.00
15-Jul ₱ 20,000.00 Rent Expense
18-Jul ₱ 20,000.00 Bal. Date Debit Date Credit
18-Jul ₱ 130,000.00 ₱ 100,000.00 2-Jul ₱ 100,000.00
20-Jul ₱ 4,400.00
30-Jul ₱ 1,410.00
30-Jul ₱ 7,580.00 Accounts Payable
30-Jul ₱ 1,250.00 Date Debit Date Credit Bal.
31-Jul ₱ 77,805.00 18-Jul ₱ 130,000.00 3-Jul ₱ 130,000.00 -₱ 125,000.00
3-Jul ₱ 80,000.00
22-Jul ₱ 45,000.00
Rental Deposit
Bal. Date Debit Credit Prepaid Expense
₱ 100,000.00 2-Jul ₱ 100,000.00 Bal. Date Debit Date Credit
₱ 35,000.00 3-Jul ₱ 15,000.00
18-Jul ₱ 20,000.00
Unadjusted Ledger
Saloon Equipment Service Income

₱ 500,000.00 3-Jul ₱ 500,000.00 4-Jul ₱ 7,500.00 -₱ 388,800.00
15-Jul ₱ 120,000.00
25-Jul ₱ 188,800.00
26-Jul ₱ 12,000.00
Linens 31-Jul ₱ 60,500.00
Bal. Date Debit Date Credit
₱ 71,000.00 3-Jul ₱ 26,000.00
22-Jul ₱ 45,000.00 Salaries, Wages and Allowances
₱ 191,000.00 15-Jul ₱ 85,500.00
Funitures and Fixtures 15-Jul ₱ 20,000.00
Bal. Date Debit Date Credit 31-Jul ₱ 85,500.00
₱ 260,000.00 3-Jul ₱ 260,000.00
Training Expense
Office Equipment Bal. Date Debit Date Credit
Bal. Date Debit Date Credit ₱ 4,400.00 20-Jul ₱ 4,400.00
₱ 80,000.00 3-Jul ₱ 80,000.00
Loans Payable
Accounts Receivable Date Debit Date Credit Bal.
Bal. Date Debit Date Credit 21-Jul ₱ 200,000.00 -₱ 200,000.00
₱ 9,200.00 26-Jul ₱ 12,000.00 31-Jul ₱ 2,800.00
Bank Service Charges

₱ 5,000.00 21-Jul ₱ 5,000.00
Unadjusted Ledger
Communication Expense
₱ 1,410.00 30-Jul ₱ 1,410.00

₱ 8,830.00 30-Jul ₱ 7,580.00
30-Jul ₱ 1,250.00
Withholding Taxes Payable

Date Debit Date Credit Bal.
31-Jul ₱ 4,275.00 -₱ 4,275.00
Social Security Premiums

₱ 1,710.00 31-Jul ₱ 1,710.00
Social Security Premium Payable

31-Jul ₱ 3,420.00 -₱ 3,420.00
Medical Premiums
₱ 1,710.00 31-Jul ₱ 1,710.00
Medical Premium Payable

Unadjusted Ledger
31-Jul ₱ 3,420.00 -₱ 3,420.00
Unadjusted Ledger
THE SPAZ
Unadjusted Trial Balance
31-Jul-16
Account Debit Credit
Cash ₱ 9,348,655.00
Saloon Equipment (60 months) ₱ 500,000.00
Office Equipment (36 months) ₱ 80,000.00
Funitures and Fixtures (60 months) ₱ 260,000.00
Linens (18 months) ₱ 71,000.00
Training Expense ₱ 4,400.00
Communication Expense ₱ 1,410.00
TOTAL ₱ 10,724,915.00 ₱ 10,724,915.00
Unadjusted Trial Balance

THE SPAZ
General Journal Adjustments
31-Jul-16
31-Jul Depreciation - Saloon Equipment ₱ 8,333.33
Accumulated Depreciation - Saloon Equipment ₱ 8,333.33
July Depreciation on Saloon Equipment (PHP 500,000/60 months)
Depreciation - Linens ₱ 2,258.06
Accumulated Depreciation - Linens ₱ 2,258.06
July Depreciation on Linens ((PHP 45,000/18 months)/31 days)*28 days.
Depreciation - Linens ₱ 725.81
Accumulated Depreciation - Linens ₱ 725.81
Depreciation - Furnitures and Fixtures ₱ 4,333.33
Accumulated Depreciation - Furnitures and Fixtures ₱ 4,333.33
July Depreciation on Furniture and Fixtures (PHP 260,000/60 months)
Depreciation - Office Equipment ₱ 2,222.22
Accumulated Depreciation - Office Equipment ₱ 2,222.22
July Depreciation on Office Equipment (PHP 80,000/36 months)
Saloon Supplies Expense ₱ 35,000.00
Adjusting entry for supplies utilized as of Jul 31.
Note 1: Interest Expense adjustments will be reflected next month.
₱ 52,872.75 ₱ 52,872.75
Adjusting Entries
THE SPAZ
Adjusted General Journal
31-Jul-16
1-Jul Cash ₱ 10,000,000.00
Initial capital for business.
2-Jul Taxes, Licenses and Fees ₱ 5,000.00
Cash ₱ 5,000.00
Paid for local Business Permits.
Cash ₱ 2,000.00
Paid for local Business Name Registration.
Cash ₱ 100,000.00
Paid for one (1) month's rent.
Cash ₱ 100,000.00
Paid for rent deposit equal to a month's rent.
3-Jul Saloon Equipment ₱ 500,000.00
Cash ₱ 500,000.00
Bought various equipment for business.
Linens ₱ 26,000.00
Cash ₱ 26,000.00
Bought linens - towels, sheets, robes, blankets, etc.
Furnitures and Fixtures ₱ 260,000.00
Cash ₱ 130,000.00
Bought furnishings for business. 50% is on credit due in 15 days.
Cash ₱ 15,000.00
Bought a month's worth of supplies for saloon use. - oils, lotions,etc.
Bought two (2) desktop computers on credit. Due in 60 days.
4-Jul Cash ₱ 7,500.00
Revenue for services provided.
Adjusted Journal
15-Jul Cash ₱ 120,000.00

Cash ₱ 85,500.00
Employee salaries from July 1 to 15 without deductions.
Cash ₱ 20,000.00
Employee Living Allowances for July.
18-Jul Prepaid Expense ₱ 20,000.00
Cash ₱ 20,000.00
Bought additional supplies for saloon use.
Cash ₱ 130,000.00
Paid remaining amount owed for Furnishings bought on Jul 3.
20-Jul Training Expense ₱ 4,400.00
Cash ₱ 4,400.00
Paid for massage training for two (2) masseurs.
21-Jul Cash ₱ 195,000.00
Loan from Bank of the Philippine Islands (BPI)
22-Jul Linens ₱ 45,000.00
Bought additional linens on 30-day credit.
25-Jul Cash ₱ 188,800.00
26-Jul Accounts Receivable ₱ 12,000.00
Revenue for services provided on credit.
30-Jul Communication Expense ₱ 1,410.00
Cash ₱ 1,410.00
Communication costs for July.
Cash ₱ 7,580.00
Electricity costs for July.
Cash ₱ 1,250.00
Water costs for July.
Adjusted Journal
31-Jul Cash ₱ 60,500.00

Cash ₱ 2,800.00
Partial payment received from customer payables.
Cash ₱ 77,805.00
Employee salaries from July 15 to 31 with deductions.
Company co-pay for Social Security and Medical Premiums included.
31-Jul Depreciation - Saloon Equipment ₱ 8,333.33
July Depreciation on Saloon Equipment (PHP 500,000/60 months)

Depreciation - Linens ₱ 725.81

Accumulated Depreciation - Linens ₱ 725.81
Depreciation - Furnitures and Fixtures ₱ 4,333.33

Accumulated Depreciation - Furnitures and Fixtures ₱ 4,333.33
July Depreciation on Furniture and Fixtures (PHP 260,000/60 months)

July Depreciation on Office Equipment (PHP 80,000/36 months)

Adjusting entry for supplies utilized as of Jul 31.
₱ 12,136,532.75 ₱ 12,136,532.75
Adjusted Journal
THE SPAZ
The Ledger
Asset Accounts Liability and Equity Accounts
Cash Owner's Capital
₱ 9,348,655.00 1-Jul ₱ 10,000,000.00 2-Jul ₱ 5,000.00 1-Jul ₱ 10,000,000.00 -₱ 10,000,000.00
4-Jul ₱ 7,500.00 2-Jul ₱ 2,000.00
15-Jul ₱ 120,000.00 2-Jul ₱ 100,000.00
21-Jul ₱ 195,000.00 2-Jul ₱ 100,000.00 Taxes, Licenses and Fees
25-Jul ₱ 188,800.00 3-Jul ₱ 500,000.00 Bal. Date Debit Date Credit
31-Jul ₱ 60,500.00 3-Jul ₱ 26,000.00 ₱ 7,000.00 2-Jul ₱ 5,000.00
31-Jul ₱ 2,800.00 3-Jul ₱ 130,000.00 2-Jul ₱ 2,000.00
3-Jul ₱ 15,000.00
15-Jul ₱ 85,500.00
15-Jul ₱ 20,000.00 Rent Expense
18-Jul ₱ 20,000.00 Bal. Date Debit Date Credit
18-Jul ₱ 130,000.00 ₱ 100,000.00 2-Jul ₱ 100,000.00
20-Jul ₱ 4,400.00
30-Jul ₱ 1,410.00
30-Jul ₱ 7,580.00 Accounts Payable
30-Jul ₱ 1,250.00 Date Debit Date Credit Bal.
31-Jul ₱ 77,805.00 18-Jul ₱ 130,000.00 3-Jul ₱ 130,000.00 -₱ 125,000.00
3-Jul ₱ 80,000.00
22-Jul ₱ 45,000.00
Rental Deposit
Bal. Date Debit Credit Prepaid Expense
₱ 100,000.00 2-Jul ₱ 100,000.00 Bal. Date Debit Date Credit
₱ - 3-Jul ₱ 15,000.00
18-Jul ₱ 20,000.00
Adjusted Ledger
31-Jul ₱ 35,000.00
Saloon Equipment Service Income

₱ 500,000.00 3-Jul ₱ 500,000.00 4-Jul ₱ 7,500.00 -₱ 388,800.00
15-Jul ₱ 120,000.00
25-Jul ₱ 188,800.00
26-Jul ₱ 12,000.00
Linens 31-Jul ₱ 60,500.00
₱ 71,000.00 3-Jul ₱ 26,000.00
22-Jul ₱ 45,000.00 Salaries, Wages and Allowances
₱ 191,000.00 15-Jul ₱ 85,500.00
Funitures and Fixtures 15-Jul ₱ 20,000.00
Bal. Date Debit Date Credit 31-Jul ₱ 85,500.00
₱ 260,000.00 3-Jul ₱ 260,000.00
Training Expense
Office Equipment Bal. Date Debit Date Credit
Bal. Date Debit Date Credit ₱ 4,400.00 20-Jul ₱ 4,400.00
₱ 80,000.00 3-Jul ₱ 80,000.00
Loans Payable
Accounts Receivable Date Debit Date Credit Bal.
Bal. Date Debit Date Credit 21-Jul ₱ 200,000.00 -₱ 200,000.00
₱ 9,200.00 26-Jul ₱ 12,000.00 31-Jul ₱ 2,800.00
Bank Service Charges

Accumulated Depreciation - Saloon Equipment Bal. Date Debit Date Credit
Date Debit Date Credit Bal. ₱ 5,000.00 21-Jul ₱ 5,000.00
31-Jul ₱ 8,333.33 -₱ 8,333.33
Adjusted Ledger
Communication Expense
Accumulated Depreciation - Office Equipment Bal. Date Debit Date Credit
Date Debit Date Credit Bal. ₱ 1,410.00 30-Jul ₱ 1,410.00
31-Jul ₱ 2,222.22 -₱ 2,222.22

Accumulated Depreciation - Funitures and Fixtures ₱ 8,830.00 30-Jul ₱ 7,580.00
Date Debit Date Credit Bal. 30-Jul ₱ 1,250.00
31-Jul ₱ 4,333.33 -₱ 4,333.33
Withholding Taxes Payable

Accumulated Depreciation - Linens 31-Jul ₱ 4,275.00 -₱ 4,275.00
31-Jul ₱ 2,258.06 -₱ 2,983.87
31-Jul ₱ 725.81 Social Security Premiums
₱ 1,710.00 31-Jul ₱ 1,710.00
Social Security Premium Payable

31-Jul ₱ 3,420.00 -₱ 3,420.00
Medical Premiums
₱ 1,710.00 31-Jul ₱ 1,710.00
Medical Premium Payable

Adjusted Ledger
31-Jul ₱ 3,420.00 -₱ 3,420.00
Depreciation - Saloon Equipment

₱ 8,333.33 31-Jul ₱ 8,333.33
Depreciation - Office Equipment

₱ 2,222.22 31-Jul ₱ 2,222.22
Depreciation - Funitures and Fixtures

₱ 4,333.33 31-Jul ₱ 4,333.33
Depreciation - Linens
₱ 2,983.87 31-Jul ₱ 2,258.06
31-Jul ₱ 725.81
Saloon Supplies Expense

₱ 35,000.00 31-Jul ₱ 35,000.00
Adjusted Ledger
Adjusted Ledger
THE SPAZ
Adjusted Trial Balance
31-Jul-16
Account Debit Credit
Cash ₱ 9,348,655.00
Saloon Equipment (60 months) ₱ 500,000.00
Office Equipment (36 months) ₱ 80,000.00
Funitures and Fixtures (60 months) ₱ 260,000.00
Linens (18 months) ₱ 71,000.00
Prepaid Expense ₱ -
Accumulated Depreciation - Funitures and Fixtures ₱ 4,333.33
Salaries, Wages, Allowances ₱ 191,000.00
Training Expense ₱ 4,400.00
Communication Expense ₱ 1,410.00
Depreciation - Saloon Equipment ₱ 8,333.33
Depreciation - Furniture and Fixtures ₱ 4,333.33


TOTAL ₱ 10,742,787.75 ₱ 10,742,787.75

THE SPAZ
Balance Sheet
31-Jul-16
Assets Liabilities & Equity
CURRENT ASSETS CURRENT LIABILITIES
Cash ₱ 9,348,655.00 Accounts Payable ₱ 125,000.00
Accounts Receivable ₱ 9,200.00 Withholding Taxes Payable ₱ 4,275.00
Rental Deposit ₱ 100,000.00 Social Security Premiums Payable ₱ 3,420.00
Total Current Assets ₱ 9,457,855.00 Medical Premium Payable ₱ 3,420.00
Total Current Liabilities ₱ 136,115.00
NONCURRENT ASSETS NONCURRENT LIABILITIES

Saloon Equipment ₱ 500,000.00 Loans Payable (18 month term) ₱ 200,000.00
LESS: Accumulated Depreciation - Saloon Equipment -₱ 8,333.33 Total NonCurrent Liabilities ₱ 200,000.00
LESS: Accumulated Depreciation - Office Equipment -₱ 2,222.22 EQUITY
Furnitures and Fixtures ₱ 260,000.00 Owner's Capital ₱ 10,000,000.00
LESS: Accumulated Depreciation - Funitures and Fixtures -₱ 4,333.33 Profit and Loss Summary Account ₱ 14,867.25
Linens ₱ 71,000.00 Total Equities ₱ 10,014,867.25
LESS: Accumulated Depreciation - Linens -₱ 2,983.87
Total Current Assets ₱ 893,127.25
TOTAL ASSETS ₱ 10,350,982.25 TOTAL LIABILITIES AND EQUITY ₱ 10,350,982.25
Balance Sheet
THE SPAZ
Income Statement
Jul 01 - Jul 31, 2016
Revenues
Other Income ₱ -
Total Revenue ₱ 388,800.00
Expenses
Salaries, Wages, Allowances -₱ 191,000.00
Social Security Premiums -₱ 1,710.00
Medical Premiums -₱ 1,710.00
Training Expense -₱ 4,400.00
Rent Expense -₱ 100,000.00
Taxes, Licenses and Fees -₱ 7,000.00
Prepaid Expense ₱ -
Communication Expense -₱ 1,410.00
Electricity and Water -₱ 8,830.00
Bank Service Charges -₱ 5,000.00
Depreciation - Saloon Equipment -₱ 8,333.33
Depreciation - Office Equipment -₱ 2,222.22
Depreciation - Furniture and Fixtures -₱ 4,333.33
Depreciation - Linens -₱ 2,983.87
Saloon Supplies Expense -₱ 35,000.00
Total Expense -₱ 373,932.75
Profit ₱ 14,867.25
Income Statement
THE SPAZ
Statement of Cash Flows
For the Period Jul 01 - Jul 31, 2016
Cash flows from operating activities:
Cash received from customers ₱ 379,600.00
Cash paid for business setup -₱ 7,000.00
Cash paid for rent and rent deposit -₱ 200,000.00
Cash paid to employees -₱ 183,305.00
Cash paid for employee training -₱ 4,400.00
Cash paid for utilities -₱ 10,240.00
NET CASH PROVIDED/USED IN OPERATING ACTIVITIES -₱ 25,345.00
Cash flows from investing activities:

Cash paid to purchase Property and Equipment -₱ 821,000.00
NET CASH PROVIDED/USED IN INVESTING ACTIVITIES -₱ 821,000.00
Cash flows from financing activities:

Cash received from initial capital investment ₱ 10,000,000.00
Cash from long-term debt (BPI) ₱ 195,000.00
NET CASH PROVIDED/USED IN FINANCING ACTIVITIES ₱ 10,195,000.00
NET INCREASE/DECREASE IN CASH ₱ 9,348,655.00
Beginning Balance (June 2016) ₱ -

Ending Cash Balance (July 2016) ₱ 9,348,655.00
Cash Flow
THE SPAZ
Measures of Liquidity
Net Working Capital = Current Assets - Current Liabilities = ₱ 9,457,855.00 - ₱ 136,115.00 = ₱ 9,321,740.00 This result tells us that there is a substantial amount of capital that is idle.
Consequently, we can look for other ways of more aggresively investing
this capital so that the cash yields a higher return rather than just bank
interest rates.
Current Ratio = Current Assets / Current Liabilities = ₱ 9,457,855.00 / ₱ 136,115.00 = 69.48 At a ratio of 69.48:1, we can see that the company is very solvent and
would be more than able to payoff current liabilities, should the need
arise. This also shows that it is relatively low-risk to increase payables for
business expansion, should opportunities arise.
This is a good sign for investors, but an even better sign to creditors who
like feel as safe as they can that they will be paid back on time.
Quick Ratio = Quick Assets / Current Liabilities = ₱ 9,357,855.00 / ₱ 136,115.00 = 68.75 The Quick Ratio of 68.75 for the company is very highly attractive to
creditors who will find comfort in the amount of assets that can be
immediately used, if needed. This is a very solvent business.
Composition of Current Assets = (Asset / Total Assets ) x 100 = ₱ 9,348,655.00 / ₱ 10,350,982.25 = 90.32% Clearly, we see that Cash and Cash Equivalents comprise a very substantial
(Cash) portion of the company assets.
The company may have been too modest in spending during the first
month of operations and can now use the Financial Statements for July to
best decide how to widen their asset portfolio and make better use of
capital that is untouched. Fortunately, their high liquidity allows them a lot
of flexibility in this regard.
Composition of Current Assets = (Asset / Total Assets ) x 100 = ₱ 9,200.00 / ₱ 10,350,982.25 = 0.09% This tells us that Accounts Receivable are a minute portion of the
(Accounts Receivable) company's assets.
They can engage in more promotional packages to spur revenue on credit
and market that around them. They can expand this even further and be
more innovative - they can sell gift cards, prepaid spa packages and the
like.
Composition of Current Assets = (Asset / Total Assets ) x 100 = ₱ 100,000.00 / ₱ 10,350,982.25 = 0.97% Rent Deposit for the 1-year lease is around 1% of the Current Asset
(Rent Deposit) composition. Given how the spa's profits trend for the duration of the
lease, they have enough cash available to potentially increase their
business area by renting more space to accommodate more services and
more customers concurrently.
Analysis
Measures of Leverage
Debt Ratio = Total Liabilities / Total Assets = ₱ 336,115.00 / ₱ 10,350,982.25 3.25% The Debt Ratio of the company is very low. This will appear very low-risk
to creditors and will not warrant the need for daily oversight of the
financial information. This also indicates underutilization of a potential
major source of additional financing to allow for more growth. They
clearly have a lot of expansion potantial if the other indicators show that
there is a viable opportunity for this.
Equity Ratio = Total Equity / Total Assets = ₱ 10,014,867.25 / ₱ 10,350,982.25 96.75% This high ratio of 96.75% is an incentive for other potential shareholders
to invest. They will find it attractive that banks or other shareholders are
confident in putting stake in the business. For creditors, this shows that
the company is less risky to lend future loans to.
Measures of Profitability
Gross Profit Rate = Gross Profit / Net Sales = ₱ 388,800.00 / ₱ 388,800.00 100.00% The 100% rate for the first month shows that there were no deductions
from the gross profit. The servce-nature of the enterprise and the
oprations of the first month didn't call for any refunds to be given. As
such, the entirity of the gross sales were intact. This tells us that there is a
strong market for the service. It is viable and people are very satisfied with
the services they received from "The Spaz".
Net Profit Rate = Net Profit / Net Sales = ₱ 14,867.25 / ₱ 388,800.00 3.82% 3.82% of the spa's revenue made it all the way to the bottom line.
It is a good thing that the company had a profit for the first month of
operations. It really shows there is potential in this business. As the
company stabilizes, more service offerings can be considered and maybe
some adjustments to pricing can be evaluated to see if there is a potential
to increase this margin.
It would be good to also compare this moargin to other companies in the

same industry since that would be a more effective benchmark on how
much more margin adjustments can be done.
Measures of Activity
Note: No Activity Ratios were used during the first month since there is no previous period to average things against. This will be revisited later when we can begin to compare.
Analysis
Profitability Ratios
Gross Profit Rate = Gross Profit / Net Sales
Evaluates how much gross profit is generated from sales. Gross profit is equal to net
sales (sales minus sales returns, discounts, and allowances) minus cost of sales.
Return on Sales = Net Income / Net Sales
Also known as "net profit margin" or "net profit rate", it measures the percentage of
income derived from dollar sales. Generally, the higher the ROS the better.
Return on Assets = Net Income / Average Total Assets
In financial analysis, it is the measure of the return on investment. ROA is used in
evaluating management's efficiency in using assets to generate income.
Conclusion
Here's a tip. When computing for a ratio that involves an income statement item and a
balance sheet item, make sure to average the balance sheet item. This is because the
income statement item pertains to a whole period's activity. The balance sheet item
should then reflect the whole period as well; that's why we average.

Balance Sheet Accounts Income Statement Accounts: APPENDIX A: Company Chart of Accounts

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Balance Sheet Accounts Income Statement Accounts: APPENDIX A: Company Chart of Accounts

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Pre-LOB Project: A Journal of My Own Business | Cris Galang

APPENDIX A: Company Chart of Accounts

Balance Sheet Accounts Income Statement Accounts

15-Jul Cash ₱ 120,000.00

31-Jul Cash ₱ 60,500.00

Saloon Equipment Service Income

Bank Service Charges

Electricity and Water

Withholding Taxes Payable

Social Security Premiums

Social Security Premium Payable

Medical Premium Payable

31-Jul ₱ 3,420.00 -₱ 3,420.00

TOTAL ₱ 10,724,915.00 ₱ 10,724,915.00

Unadjusted Trial Balance

Note 1: Interest Expense adjustments will be reflected next month.

15-Jul Cash ₱ 120,000.00

31-Jul Cash ₱ 60,500.00

Depreciation - Linens ₱ 2,258.06

Depreciation - Linens ₱ 725.81

Depreciation - Furnitures and Fixtures ₱ 4,333.33

Depreciation - Office Equipment ₱ 2,222.22

Saloon Supplies Expense ₱ 35,000.00

Saloon Equipment Service Income

Bank Service Charges

Electricity and Water

Withholding Taxes Payable

Social Security Premium Payable

Medical Premium Payable

31-Jul ₱ 3,420.00 -₱ 3,420.00

Depreciation - Saloon Equipment

Depreciation - Office Equipment

Depreciation - Funitures and Fixtures

Saloon Supplies Expense

Adjusted Trial Balance

Saloon Supplies Expense ₱ 35,000.00

Adjusted Trial Balance

NONCURRENT ASSETS NONCURRENT LIABILITIES

TOTAL ASSETS ₱ 10,350,982.25 TOTAL LIABILITIES AND EQUITY ₱ 10,350,982.25

NET CASH PROVIDED/USED IN OPERATING ACTIVITIES -₱ 25,345.00

Cash flows from investing activities:

Cash flows from financing activities:

NET CASH PROVIDED/USED IN FINANCING ACTIVITIES ₱ 10,195,000.00

NET INCREASE/DECREASE IN CASH ₱ 9,348,655.00

Beginning Balance (June 2016) ₱ -

It would be good to also compare this moargin to other companies in the

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