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In: Accounting

NOW Enterprises provided the following: Sales 7,500,000.00 Inventories – January 1: Raw Materials 200,000.00 Goods in...

NOW Enterprises provided the following:

Sales
7,500,000.00

Inventories – January 1:

Raw Materials
200,000.00

Goods in Process
240,000.00

Finished Goods
360,000.00

Inventories – December 31

Raw materials
280,000.00

Goods in process
170,000.00

Finished goods
300,000.00

Purchases
3,000,000.00

Direct labor
950,000.00

Indirect labor
250,000.00

Superintendence
210,000.00

Light, heat and power
320,000.00

Rent – factory building
120,000.00

Repair and maintenance – machinery
50,000.00

Factory supplies used
110,000.00

Sales salaries
400,000.00

Advertising
160,000.00

Depreciation – store equipment
70,000.00

Office salaries
150,000.00

Depreciation – office equipment
40,000.00

Depreciation – machinery
60,000.00

Sales returns and allowances
50,000.00

Interest income
10,000.00

Gain on sale of equipment
100,000.00

Delivery expenses
200,000.00

Accounting and legal fees
150,000.00

Office expenses
250,000.00

Earthquake loss
300,000.00

Gain from expropriation of asset
100,000.00

Income tax expense
320,000.00

Required: A detail "NOTES" and income statement using the functional method for the year ended December 31, 2019.

Expert Solution

Notes to expenses by Function
Cost of Goods sold
Raw materials inventory, Jan 1	200000
Add: Purchases	3000000
Less:Raw materials,Dec 31	-280000
Raw materials consumed		2920000
Direct labor		950000
Indirect labor		250000
Superintendence		210000
Light, heat and power		320000
Rent – factory building		120000
Repair and maintenance – machinery		50000
Factory supplies used		110000
Depreciation – store equipment		70000
Depreciation – machinery		60000
Costs incurred during the year			5060000
Add: Goods in Process, Jan 1			240000
Less:Goods in process, Dec 31			-170000
Cost of goods manufactured				5130000
Add: Finished goods, Jan 1				360000
Less : Finished goods, Dec 3 1				-300000
Cost of Good sold				5190000

Selling expenses
Sales salaries	400000
Advertising	160000
Delivery expenses	200000
Total selling expenses	760000


Office & administrative expenses
Office salaries	150000
Depreciation – office equipment	40000
Accounting and legal fees	150000
Office expenses	250000
Total Office & Administrative expenses	590000

Income Statement by Function
Sales	7500000
Less:Sales returns and allowances	50000
Net sales		7450000
Cost of Goods sold(Refer wkgs.)		-5190000
Gross profit		2260000
Operating expenses:
Selling expenses	760000
Office & administrative expenses	590000
Total Operating expenses		-1350000
Operating profit		910000
Non-operating expenses/(Income)
Earthquake loss	300000
Interest income	-10000
Gain on sale of equipment	-100000
Gain from expropriation of asset	-100000
Total Non-operating expenses/(Income)		-90000
Income before tax		820000
Income tax expense		-320000
Net Income		500000

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