(1) Titular Company asked you to interpret the following ratios provided by its accountant.

Acid Test Ratio 1.5 to 1

Times Interest Earned 8 times

Gross Margin Ratio 40%

Inventory Turnover 6 times

Debt to Equity Ratio 9 to 1

Ratio of Operating Expenses to Sales 20%

The gross profit for the year ended December 31, 2019 was Php 1.2M. Total stockholders' equity on December 31, 2019 amounted to Php 1.8M. The beginning balance of merchandise inventory was Php 400,000. The company's long-term liabilities consisted of bonds payable with interest at 10%. You decided to reconstruct the company's financial statements based on the limited information given to serve as basis for further analysis.

Compute the following:

1. Total Sales
2. Ending Inventory
3. Total Purchases
4. Operating Expenses
5. Operating Income
6. Interest Expense
7. Quick Assets
8. Total Current Assets
9. Bonds Payable
10. Total Current Liabilities

(2) The following ratios and other data pertain to the financial statements of Tenorio Company for the year ended December 31, 2018.

Current Ratio 1.80:1

Acid test Ratio1.50:1

Working Capital P 320,000

Inventory Turnover (based on ending inventory 8 times

Gross Profit Percentage 40%

Average age of outstanding A/R (based on 360 days) 90 days

Plant assets to stockholders' equity 80 to 1

Earnings per share P 2.00

Capital Stock, shares outstanding 40,000

Net earnings for the year as a % of capital stock 20%

10% Bonds payable at the beginning and end of 2018 P200,000

The company has no prepaid expenses, deferred or intangible assets.

Reconstruct the following financial statements:

1. Income Statement for 2018
2. Balance Sheet as of December 31, 2018