The FMA Corporation ended 2006 operations with the following balance sheet.

FMA CORPORTATION

Balance Sheet

December 31, 2006

Current AssetsCurrent Liabilities

Cash .................................. P 15,000Accounts Payable ................. P60,000

Marketable Securites................. 20,000Notes Payabel........................50,000

Accounts Receivable..................50,000Total Current Liabilities........P 110,000

Inventory .................................80,000

Total Current Assets...........P 165,000Long-term bonds..................P75,000

Fixed AssetsStockholder's Equity

Gross Plant and Equip... 250,000Common Stock.....................P60,000

Less:Axxum dept....... 75,000Paid-in-Capital....................40,000

Net Plant & Equip.....................P 175,000Retained earnings..................55,000

Total Assets.........................P 340,000Total Liabilities & Equity........P340,000

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FMA's sales in 2007 were P 360,000 with cost of goods sold averaging 65 percent of sales.Selling and Administrative expenses were P 36,000 and depreciation expense for the year was P 50,000.On December 31, 2007, the firm paid the interest ( 10 percent ) on its bank loan ( notes payable ) for the year and also renewed the loan after paying P10,000 on the principal balance.Interest at a 12 percent rate was paid to the firm''s bondholders.During 2007, accounts receivable declined by 5 percent but inventory increased by 10 percent.A rise of 12 percent in accounts payable provided financing for much of the added inventory.The firm purchased a new machine for P 65,000 in October and paid a total cash dividend of P 10,775 at the end of the year.The management elected not to raise any additional external capital in 2007 but all of the marketable securities were converted to cash and used for business operations.

a)Present an Income Statement for 2007

b)Present a balance sheet as of December 31, 2007

c)Present a Sources and Uses of Funds Statement for 2007

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