Under the Language of Business

Understanding Financial Statements

Respond to the scenario below by using the P-M-I Chart.

In the Interesting box, it is some facts about the specific financial statement.

Scenario: Shark Loans received a request for a construction loan from Wendy Services Inc. This construction loan will be used for the building of their fifth branch in Pasay. The company submitted their statement of financial position and income statement. Help Shark Loans choose with financial statement they would use as a basis on whether they will accept or reject Wendy Services Inc.'s request.

WENDY SERVICES INC.

Balance Sheet

December 31

200A 200B

Assets

Cash P 166,320.00P 332,540.00

Accounts Receivable 119,350.00 59,675.00

Office Supplies 5,775.005,775.00

Prepaid Insurance 15,400.0015,400.00

Office Equipment 261,800.00300,000.00

Accumulated Depreciation

53,900.00 207,900.00 61,500.00 238,500.00

Total Assets P 514,745.00 P651,990.00

Liabilities and Owner's Equity

Accounts PayableP53,900.00P107,800.00

Salary Payable 9,240.009,240.00

Unearned Revenue 23,100.00 27,800.00

Total Liabilities P 86,240.00 P144,840.00

B. Sia-Ko, Capital 428,500.00507,150.00

Total Liabilities and Owner's Equipment P514,745.00P651,990.00

WENDY SERVICES INC

Income Statement

December 31

200A200B

Revenue:

Service Revenue P600,000.00P900,000.00

Expenses:

Equipment rental expenseP200,000.00P200,000.00

Wages expense P90,000.00P90,000.00

Utilities expenseP60,000.00P60,000.00

Total expenses P350,000.00P350,000.00

Net IncomeP250,000.00 P550,000.00

To Answer USE P-M-I CHART

Response 1: Statement of Financial Position

What would be included in PLUS box: ?

What would be included in Minus box: ?

What would be included in Interesting box: ?

Response 2: Income Statement

What would be included in PLUS box: ?

What would be included in MINUS box: ?

What would be included in Interesting box: ?

My Decision: ?