To finance its short-term obligation on the year 2019, the company will avail a loan of PI,000,000 with an annual interest

INSTRUCTIONS TO CANDIDATES

ANSWER ALL QUESTIONS

BUSINESS FINANCE ACTIVITY 

Requirement: Prepare a 3-year Projected Statement of Profit or Loss for ABM Trading Corporation using the following assumptions: 

a. Sales in 2016 is P58,694,500. Sales tun expected to increase by 20% every year.

b. Cost of Sales is 60% of sales.

c. Variable operating expenses is 7.25', of sales. The company depreciates hi r property. plan, and equipment over an average period of 10 years. As of December 31, 2016, the gross balance of PPE is P35,000,000. Depreciation expense is 10% of the gross beginning balance. On January 2018, . company will avail a new transportation equipment worth P2,000,000. And on March 2019, office equipment amounting to P1,800,000 will be purchased. It is thc policy of company that PPE acqui. in the first half of the year will be depreciated for one full year.

d. As of December 31. 2016. the company incurred a long-term loan amounting to P40,000.000 with an annual interest rate of 8.5% Principal amount of P2,000,000 is paid every June 30 and December 31. e. In addition to financing requirement for 2018. the company will borrow on a shon-tenn basis an amount of P2,000,000 with an annual interest rate of 7%. This will be paid on December 31, 2018.

E On December 31, 2011, another long-term loan amount,. to P30.000.000 with an annual interest rate of 6.5% will be incurred. Principal amount of P3.000.000 is paid every June 30 and December 31.

g. To finance its short-term obligation on the year 2019, the company will avail a loan of PI,000,000 with an annual interest rate of 5%. This will be paid on December 31. 2019.

h. Income tax rate is 30%. 

Note: Make your answers in nearest huntheths. 

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