CARRY ME ANYWHERE

NOTES TO THE FINANCIAL STATEMENTS

(All amounts in Philippine Peso unless otherwise stated)

1. AGENCY BACKGROUND

2. REPORT ON OPERATIONS

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a. Basis of Financial Statements Preparation

The financial statements are presented in Philippine peso, PPI’s functional and presentation currency, and
all values are rounded to the nearest peso, except when otherwise indicated.

b. Statement of Compliance

The accompanying financial statements were presented in conformity with the Generally Accepted
Accounting Principles (GAAP) in the Philippines as set forth in the Philippine Financial Reporting Standards
(PFRS).

c. Cash & Cash Equivalents

Cash includes cash on hand and in bank. Cash equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash with maturity dates of three months or less from the date of
acquisition.

d. Accounts Receivable – Trade

Trade receivables are recognized at their face value minus allowance for doubtful accounts.

e. Inventories

Merchandise Inventory is valued at lower of cost and net realizable value. Cost is determined using the
specific identification method.

g. Property and equipment

Property equipment are stated at cost less accumulated depreciation. Cost includes expenditure that is
directly attributable to the acquisition of the items.

Depreciation is computed using the straight-line method over the estimated useful lives of the depreciable
assets.

h. Trade and other payables

9
 Accounts payable are recognized in the period when legally enforceable claim against the Corporation. arises,
recognized initially at fair value and subsequently measured at amortized cost using the effective interest
method less any settlement payments.

Other payables and accruals are liabilities to pay for goods or services that have been received or supplied
but have not been paid.

i. Revenue and Expense Recognition

Revenue is recognized to the extent that it is possible that the economic benefits will flow to the Company
and the revenue can be reliably measured.

The company adopts the accrual method of accounting.

In selling goods, revenue is recognized upon the transfer of significant risk and rewards of ownership of the
goods to the customer. Revenue is not recognized to the extent where there are significant uncertainties
regarding recovery of the consideration due, associated costs, or the possible return of goods.

4. CASH AND CASH EQUIVALENTS

The total amount of ₱81,796,440, that is presented in the financial statements, is the total amount of cash
held by the corporation.

5. ACCOUNTS RECEIVABLE – TRADE

Accounts receivables represent obligation of customers to the company to pay the same which is normally
collected in operating cycle of the corporation. The currents account receivable by the company as of January
2019 is ₱61,908,000 with no allowance for bad debts and uncollectible accounts.

6. INVENTORIES - NET

The cost of the product per unit includes the cost of freight in. The table below shows the computation of the new
cost of the product.

FREIGHT IN ₱ 2,000,000.00
PRODUCT QTY. % NEW COST
A350ml 100,000.00 ₱ 20,000,000.00 0.24 ₱476,190.48 ₱ 204.76
B500ml 80,000.00 28,000,000.00 0.33 666,666.67 358.33
C750ml 60,000.00 36,000,000.00 0.43 857,142.86 614.29
84,000,000.00

10
Ending Inventory

A350ml B500ml C750ml

Beginning Inventory ₱ - ₱ - ₱ -
Net Purchases 20,476,190.48 25,262,500.00 36,857,142.86
Sales (12,285,714.29) (16,125,000.00) (18,428,571.43)
Ending Inventory ₱ 8,190,476.19 ₱9,137,500.00 ₱ 18,428,571.43

For the month of January 2019, the total ending inventory of the corporation is ₱ 35,756,547.62.

8. DEFERRED TAX ASSETS

The table below shows the deferred input tax of each assets, the recognized or deductible input VAT for the
month and the total remaining deferred input VAT for the remaining periods.

2019 Transportation Transportation Computer Furnitures and

Equipment- Equipment- Equipment Fixtures
Executive Vehicle Delivery Truck
Deferred Input VAT
As of January 1, 2019 ₱ 600,000.00 ₱ 144,000.00 ₱ 72,000.00 ₱ 600,000.00
Recognized Input VAT 12,500.00 2,400.00 2,000.00 10,000.00
As of January 31, 2019 ₱ 587,500.00 ₱ 141,600.00 ₱ 70,000.00 ₱ 590,000.00

9. PROPERTY PLANT AND EQUIPMENT

This account consists of the following:

2019 Transportation Transportation Computer Furnitures and

Equipment- Equipment- Equipment Fixtures
Executive Vehicle Delivery Truck
Cost:
As of January 1, 2019 ₱ 5,000,000.00 ₱ 1,200,000.00 ₱ 600,000.00 ₱ 5,000,000.00
Additions - - - -
As of January 31, 2019 ₱ 5,000,000.00 ₱ 1,200,000.00 ₱ 600,000.00 ₱ 5,000,000.00

Accumulated Depreciation:
As of January 1, 2019 ₱ - ₱ - ₱ - ₱ -
Depreciation:
104,166.67 16,666.67 16,666.67 83,333.33
As of January 31, 2019 ₱ 104,166.67 ₱ 16,666.67 ₱ 16,666.67 ₱ 83,333.33

11. ACCOUNTS PAYABLE

Accounts and other payables amounting to 92,615,900 are the total liabilities that the represents amount due to
various suppliers for the procurement of merchandise for sale and from various expenses foe electricity, water
and telecommunication.

11
12. CAPITAL

The total of corporation’s capital is shown below:

January 2019
Ordinary Shares ₱ 80,000,000
Share Premium 20,000,000
₱100,000,000

13. SALES

The table below shows the total net sales made for the month of January 2019.

January 2019
A350ml ₱ 12,285,714.29
B500ml 16,125,000.00
C750ml 18,428,571.43
Total Net Sales ₱ 46,839,285.71

14. OTHER INCOME

Other income amounting to ₱ 2,300,000 comes from the account of distribution fee from the supplier of the
products.

15. OPERATING EXPENSES

The computation for the cost of goods sold is shown below:

Beginning Inventory ₱ -
Purchases 84,000,000.00
Freight In 2,000,000.00
Purchase Return and Allowances (3,325,000.00)
Cost of Goods Available For Sale 82,675,000.00
Ending Inventory (35,756,547.62)
Cost of Goods Sold ₱ 46,918,452.38

These are the following costs incurred in the sales made for the month:

January 2019
Cost of Goods Sold ₱ 46,918,452.38
Rent Expense 60,000.00
Salaries Expense 800,000.00
Electricity Expense 5,000.00
Water Expense 10,000.00
Telecommunication Expense 3,000.00

12
 Freight Out 3,000,000.00
Supplies Expense 500,000.00
Depreciation Expense 220,833.33
Total ₱ 51,517,285.71

16. NET INCOME

The net income reported, before tax, as of January 2019 is ₱ 3,757,714.29.

17. RETAINED EARNINGS

For the month of January, the retained earnings reported amount is ₱ 3,757,714.29 exclusive of any applicable
tax.

18. RELATED PARTY TRANSACTIONS AND RELATIONSHIPS

Related party relationships exists when one party has the liability to control, directly, or indirectly through one or
more intermediaries, the other party or exercise significant influence over the other party in making financial and
operating decisions. Such relationships also exist between and/or among entities, which are under common
control with the reporting enterprise, or between and/or among the reporting enterprises and their key
management personnel, directors, or their stockholders.

Transactions between related parties are accounted for at arm's length prices or on terms similar to those
offered to non-related entities in an economically comparable market.

19. TAX DISCLOSURES

In compliance with the requirements set forth by Revenue Regulation 15-2010, hereunder are the information on
taxes, duties and licenses fees paid or accrued during the taxable year:

A. Value-Added Tax

Output VAT ₱ 6,633,000.00

Input VAT 10,377,260.00
Creditable Input VAT (₱ 3,744,260.00)

B. Taxes withheld during the month:

WTAX-1% ₱ 5,000.00
WTAX-2% 60,360.00
WTAX-5% 3,000.00
Total Withholding Tax Payable ₱ 68,360.00

13