T1 ay13 14 acctba1 individual business case
- 1. ACCTBA1 INDIVIDUAL BUSINESS CASE 1 ST Term, Academic Year 2013-2014 Williams, J., Haka, S., Bettner, M., & Carcello, J. (2012) Financial Accounting, 15 th edition, McGraw-Hill Irwin (with modifications) Galaxy Corporation and Universal Corporation are in the same line of business and both were recently organized, so it may be assumed that the recorded costs for assets are close to current market values. The statement of financial position of two companies are as follows as of July 31, 2012. Galaxy Corporation Statement of Financial Position July 31, 2012 Assets Liabilities & Owner’s Equity Cash P 900,000 Liabilities: Accounts Receivable 1,300,000 Notes Payable (due in 60 days) P 620,000 Land 1,860,000 Accounts Payable 480,000 Building 1,900,000 Total Liabilities P1,100,000 Office Equipment 60,000 Owner’s Equity: Galaxy, Capital P4,920,000 Total Assets P6,020,000 Total Liabilities & Owner’s Equity P6,020,000 Universal Corporation Statement of Financial Position July 31, 2012 Assets Liabilities & Owner’s Equity Cash P240,000 Liabilities: Accounts Receivable 480,000 Notes Payable (due in 60 days) P1,120,000 Land 4,800,000 Accounts Payable 2,160,000 Building 3,000,000 Total Liabilities P3,280,000 Office Equipment 600,000 Owner’s Equity: Universal, Capital 5,840,000 Total Assets P9,120,000 Total Liabilities & Owner’s Equity P9,120,000 Instructions: a. Assume you are a banker and that each company has applied for a 90day loan of P600,000. Which would you consider to be the more favorable prospect? Explain your answer fully. b. Assuming that you are considering purchasing one of the companies. For which business would you be willing to pay the higher price? Do you see any indication of financial crisis that you might face shortly after buying either company? Explain you answer fully. (For either decision, additional information would be useful, but you are to reach your decision on the basis of the information available).
- 2. Format: Short bond paper Double spaced One inch margin in all sides Minimum of two pages (not including the cover page) Font: Arial 12 Cover page: Deadline: July 1, 2013 BUSINESS CASE Presented to the Accountancy Department De La Salle University In partial fulfillment Of the course requirements In ACCTBA1 (sec) Surname, First Name, M.I. Date