26. Rio Fernando opened a hardware store on July 1, 2010. After three years of operation the accounts of your Hardware, including the owners additional cash investment of P60,000 on August 1, 2013 appears as follows:

Accounts Receivable P 43,750 Office Equipment P 48, 680

Accounts Payable 16,950 Purchases 364,000

Accum. Depn - Office Equipment 22,450 R. Florendo, Drawings 49,000

Purchase Discount 1,900 Notes Payable 45,000

Accum. Depn.- Office Equipment 16,000 Purchase Returns 3,400

R. Florendo, Capital 124,620 VAT Payable 2,840

Cash 57,890 Sales 719,800

Office Salaries Expense 20,000 Sales Discount 10,400

Store Utilities Expense 30,600 Sales Returns 18,030

Bad debts 15,000 Freight Out 22,000

Interest Expense 5,400 Advertising Expense 40,000

Interest Payable 1,100 Sales Commission 40,000

Inventory, July 1, 2013 69,350 Office Supplies Used 2,300

Inventory, June 30,2014 81,520 Store Equipment 68,000

Sales Salaries Expense 19,000 Store Supplies Used 9,160

Depreciation Expense - Office Equip. 6,500 Depreciation Expense- Store Equip. 15,000

Required: a) applying PAS i revised 2007, prepare properly classified financial statements,

including a capital statement.

b) Evaluate the companys profitability using profit ratio and ROE, liquidity using

current ratio and stability using debt ratio and equity ratio. Refer to Chapter 11.

c) Evaluate companys efficiency in handling collection by computing for the receivable

Turnover. Assume collection policy of the company is 45 to 60 days and accounts

receivable beginning is P35,000. Half of the sales are on credit.