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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.

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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 bringingthe 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 ofgoods.

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

2009 2008

General Santos Drive 1,112,550.45 1,006,858.47

Alunan Avenue 195,912.70 175,607.32

General Santos City 275,113.75 265,841.99

1,583,576.30 1,448,307.78

9.  Cost of Sales

Less: Cost of SalesInventory Beginning 223,172.62 255,781.50

Add: Purchases 867,587.00 863,652.93

Total Goods Available for Sale 1,090,759.62 1,119,434.43

Inventory End 216,950.00 223,172.62

Cost of Sales 873,809.62 894,271.24

10. Operating Expenses

Salaries and Wages 109,880.00 109,200.00

Taxes and Licenses 5,2916.9 50,491.99

Rentals 135,000.00 135,000.00

Depreciation 56,375.00 56,375.00

Light and Water 45,915.60 35,812.25

Transportation and Travel 6,275.95 2,295.20

Materials and Supplies 13,418.70 3,250.00

Fuel and Oil 10,095.25 5,368.70

Communications 6,592.35 1,458.25

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Repairs and Maintenance 5,425.50 5,854.00

Miscellaneous 125.80 325.50

Total Operating Expenses 405,430.89