Question

Berna Company was organized on January 1, 2019, 25,000 ordinary shares of P100 par value being issued in exchange for property, plant and equipment valued at P3,000,000 and cash of P1,000,000. The following data summarize activities for the year. 1. Net income for the current year was P1,000,000. 2. Raw materials on hand on December 31 were equal to 25% of raw materials purchased. 3. Manufacturing costs were distributed as follows: Materials used Direct labor Factory overhead. 50% 30% 20% (includes depreciation of building, P100,000) 4. Goods in process remaining in the factory on December 31 were equal to 33 1/3% of the goods finished and transferred to stock. 5. Finished goods remaining in stock were equal to 25% of the cost of goods sold. 6. Expenses were 30% of sales. 7. Cost of goods sold was 150% of the expenses total. 8. Ninety percent of sales were collected. The balance was considered collectible. 9. Seventy five percent of the raw materials purchased were aid for. There were no expense accruals or prepayments at the end of the year. Required: statement for the year ended a. Prepare an income statement for + December 31, 2019. b. Prepare a statement of fie 31, 2019. statement of financial position on December

Answer 1

Income statement
Sales	100%		1000000/25*100=	4000000
COGS	45%		45%*4000000=	1800000
Gross profit	55%			2200000
Expenses	30%	(Given)	30%*4000000=	1200000
Net income	25%	1000000		1000000

Statement of Financial postion
Capital & Liabilities
Accounts payable	375000	Cash	1250000
Common stock	4000000	Accounts receivable	400000
Retained Earnings(Net income)	1000000	Raw materials	375000
		Goods-in-process	750000
		Finished goods	450000
		Plant & machinery	3000000
		Less: Acc. Depn.	-100000
Total	5375000	Total assets	6125000
			750000

7. Cost of goods sold was 150% of the expenses total

30%*150%=

45.00%

of sales

5. Finished goods remaining in stock were equal to 25% of the cost of goods sold.

ie. 25%*1800000=

450000

4.Goods in process remaining in the factory on December 31 were equal to 33 1/3% of the goods finished and transferred to stock.

ie. 1/3*(COGS+Finished goods remaining)

ie.1/3*(1800000+450000)=

750000

Manufacturing costs
Materials used(1-25% stock in hand)	50%	1125000
Direct labor	30%	675000
FOH(Incl.depn.,100000)	20%	450000
Total(incl.trf. To fin.gds.)		2250000

2. Raw materials on hand on December 31 were equal to 25% of raw materials purchased.

ie. 1125000/75*25=

375000

9. Seventy five percent of the raw materials purchased were paid for

Cash paid for purchases=( 1125000+375000)*75%

1125000

so, A/c s payable at Dec 31,

(1125000+375000)*(1-75%)=

375000

8. Ninety percent of sales were collected. The balance was considered collectible.

So, cash collections=

4000000*90%=

3600000

& A/c receivable=

400000

Now the cash balance will be

Beg cash 1000000+ Sale collections 3600000- Pmt. For R/M purchases 1125000-D/L, 675000-FOH(less depn.), 350000- Pmt. For expenses 1200000=

1250000