CITY ART

PETER CARO
General Santos Drive, Koronadal City

NOTES TO FINANCIAL STATEMENTS

For the Years Ended December 31, 2009 and 2008

1. Organization
Cellular City is a single proprietorship type of business owned by Mr. Peter L. Caro. It
deals with selling cell phones and its accessories. City Art is his other line engaged in
advertising.
Cellular City is a franchise but in 2008, Mr. Caro decided not to renew his franchise but
continued under one business name, City Art.
2. Significant Accounting Policies
The financial statements have been prepared in accordance with the Philippine Financial
Reporting Standards.
All accounts are recorded on historical costs.
The company uses the accrual method of accounting wherein it recognizes all income
when earned and all expenses when incurred.
The organization uses the calendar year for its financial reporting.
The following PAS are considered in this report.
PAS 1 Presentation of Financial Statements
PAS 2 Inventories
PAS 7 Cash Flow Statement
PAS 16 Property, Plant and Equipment
PAS 18 Revenue
3. Cash and Cash Equivalents
Cash and Cash Equivalents are cash on hand, demand deposits and short-term highly
liquid investments readily convertible to known amounts of cash and which are subject
to insignificant risk of changes in value.

4. Accounts Receivable
Accounts Receivable are recognized and carried at original invoice amounts less
allowance for any uncollectible amounts. An estimate for doubtful accounts is made
when collection of the full amount is no longer probable. Bad Debts are written-off
when identified.

5. Inventories are valued at cost.

6. Property, Plant and Equipment

Property, Plant and Equipment are recorded at cost less accumulated depreciation. The
cost of an asset comprises its purchase price and directly attributable costs of bringing
the asset to working condition for its intended use. Major improvements are
capitalized; expenditures for repairs and maintenance are charged to expense as
incurred.
Depreciation is computed on a straight-line basis over the estimated useful lives of the
assets. The useful life and depreciation method are reviewed periodically to ensure that
the period and method of depreciation are consistent with the expected pattern of
economic benefits from items of property, plant and equipments.
7. Revenue comprises the fair value of the consideration received for services or sale of
goods.

8. Sales are consolidated from 3 store locations, as follows:

2009
General Santos Drive
Alunan Avenue
General Santos City

1,112,550.45
195,912.70
275,113.75
1,583,576.30

9. Cost of Sales
Less: Cost of Sales
Inventory Beginning
Add: Purchases
Total Goods Available for Sale
Inventory End
Cost of Sales

223,172.62
867,587.00
1,090,759.62
216,950.00
873,809.62

10. Operating Expenses

Salaries and Wages
Taxes and Licenses
Rentals
Depreciation
Light and Water
Transportation and Travel
Materials and Supplies
Fuel and Oil
Communications

109,880.00
5,2916.9
135,000.00
56,375.00
45,915.60
6,275.95
13,418.70
10,095.25
6,592.35

2008
1,006,858.47
175,607.32
265,841.99
1,448,307.78

255,781.50
863,652.93
1,119,434.43
223,172.62
894,271.24

109,200.00
50,491.99
135,000.00
56,375.00
35,812.25
2,295.20
3,250.00
5,368.70
1,458.25

Repairs and Maintenance

Miscellaneous
Total Operating Expenses

5,425.50
125.80

5,854.00
325.50
405,430.89