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T1 ay13 14 actbas1 individual business case

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The document provides the statements of financial position for Galaxy Corporation and Universal Corporation as of July 31, 2012. Galaxy has total assets of P6,020,000 consisting mainly of cash, accounts receivable, land, and building. Its total liabilities are P1,100,000 and owner's equity is P4,920,000. Universal has total assets of P9,120,000 consisting mainly of cash, accounts receivable, land, building, and equipment. Its total liabilities are P3,280,000 and owner's equity is P5,840,000. The document asks you to assume the role of a banker considering a 90-day loan of P600,000 to each company and which

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ACTBAS1 INDIVIDUAL BUSINESS CASE 1ST Term, Academic Year 2013-2014 Williams, J., Haka, S., Bettner, M., & Carcello, J. (2012) Financial Accounting, 15th 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 statements of financial position of the two companies as of July 31, 2012 are as follows: Galaxy Corporation Statement of Financial Position July 31, 2012 Assets Liabilities & Owners 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 P 1,100,000 Office Equipment 60,000 Owners Equity: Galaxy, Capital 4,920,000 Total Assets P 6,020,000 Total Liabilities & Owners Equity P 6,020,000 Universal Corporation Statement of Financial Position July 31, 2012 Assets Liabilities & Owners Equity Cash P 240,000 Liabilities: Accounts Receivable 480,000 Notes Payable (due in 60 days) P 1,120,000 Land 4,800,000 Accounts Payable 2,160,000 Building 3,000,000 Total Liabilities P 3,280,000 Office Equipment 600,000 Owners Equity: Universal, Capital 5,840,000 Total Assets P 9,120,000 Total Liabilities & Owners Equity P 9,120,000 Instructions: a. Assume you are a banker and that each company has applied for a 90-day 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 your answer fully. (For either decision, additional information would be useful, but you are to reach your decision on the basis of the information available).
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 2, 2013 BUSINESS CASE Presented to the Accountancy Department De La Salle University In partial fulfillment Of the course requirements In ACTBAS1 (sec) Surname, First Name, M.I. Date

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T1 ay13 14 actbas1 individual business case

  • 1. ACTBAS1 INDIVIDUAL BUSINESS CASE 1ST Term, Academic Year 2013-2014 Williams, J., Haka, S., Bettner, M., & Carcello, J. (2012) Financial Accounting, 15th 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 statements of financial position of the two companies as of July 31, 2012 are as follows: Galaxy Corporation Statement of Financial Position July 31, 2012 Assets Liabilities & Owners 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 P 1,100,000 Office Equipment 60,000 Owners Equity: Galaxy, Capital 4,920,000 Total Assets P 6,020,000 Total Liabilities & Owners Equity P 6,020,000 Universal Corporation Statement of Financial Position July 31, 2012 Assets Liabilities & Owners Equity Cash P 240,000 Liabilities: Accounts Receivable 480,000 Notes Payable (due in 60 days) P 1,120,000 Land 4,800,000 Accounts Payable 2,160,000 Building 3,000,000 Total Liabilities P 3,280,000 Office Equipment 600,000 Owners Equity: Universal, Capital 5,840,000 Total Assets P 9,120,000 Total Liabilities & Owners Equity P 9,120,000 Instructions: a. Assume you are a banker and that each company has applied for a 90-day 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 your 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 2, 2013 BUSINESS CASE Presented to the Accountancy Department De La Salle University In partial fulfillment Of the course requirements In ACTBAS1 (sec) Surname, First Name, M.I. Date