Case 2 Harem, Inc. Harem, Inc., a family trading corporation, feels that it is encountering a tight money squeeze and probably needs the infusion of fresh capital into the business. A family friend, Mr. Mario Abad, is interested in the company . The Balance Sheet/Statement of Financial Position (as presented below) for December 31, 2015 and the projected transactions for the following year , 2016, are given below (000 omitted):

The following are the projected transactions for the next year, 2016, which are not necessarily in the order of occurrence (000 omitted).

Mr. Mario Abad will invest P100 cash in the shares of stock (capital) of the company.

Sales is projected in 2016 to be P1,000, of which 70% is cash sales and the rest on credit sales.

Expected merchandise inventory purchases for 2016 is P600 of which 2/3 is on credit and the rest on cash basis; inventory at year-end, 2016, is estimated at P350. Cost of goods sold is P550.

A one-year insurance policy with premiums of P24 to be paid at the beginning of February 2016.

1/5 of the organization cost is to be charged as expense in 2016.

The Notes payable dated December 31, 2015, bears an interest of 15% per annum and is to be paid together with the principal in June 30, 2017.

Depreciation for 2016 is 10% of acquisition cost.

Other operating expenses to be paid in cash in 2016, P100.

The 2016 balances of Accounts Receivable and Accounts Payable are expected to be 75% of the beginning balances. (Hint: Start with the beginning balances, add the receivable and payable in 2016, compute for the collection of receivable and payment of accounts payable in 2016, deduct the ending balances at 75% of the beginning balances, the difference is the collection of receivables and payment of payables for the year. )

Income tax for 2016 will be P76 which will be paid in 2017

Required: make a statement of the problem, alternative courses of action, and implementation plan.

I have asked this question before, but I need more input for my paper. thank you!

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ASSETS Current Assets Cash Accounts Receivable Merchandise Inventory Total Current Assets Equipment & Furniture Accumulated Depreciation organization cost Total Assets Harem, Inc. Statement of Financial Position December 31, 2015 LIABILITIES AND EQUITY Current Liabilities P100 Notes Payable 200 Accounts payable 300 Total Current Liabilities P600 Equity Capital P500 400 Retained Earnings 100 50 P1.050 Total Liabilities and Equity P100 100 P200 P600 250 850 P1,050