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			4000000
COGS
	Materials	900000
	Direct labor	540000
	Overheads	360000	1800000
Gross margin			2200000
Other expenses			1200000
Net Income			1000000

Sales	x	4000000
COGS	0.45x	1800000
Gross Margin	0.55x	2200000
Expense	0.3x	1200000
Net income	0.25x	1000000

Assume sales	x
Expenses	0.3x
COGS	=150%*0.3x
	0.45x
Net income	=0.55x-0.3x
	0.25x
0.25x	1000000
x	=1000000/0.25
	4000000

Balancesheet
Current Assets
Cash	1100000
Accounts receivable	400000
Inventory
Raw materials	400000
WIP	150000
Finished goods	450000
Total current assets	2500000
Fixed assets
Plant and equipment	3000000
Accumulated depreciation	-100000
Total fixed assets	2900000
Total assets	5400000
Liabilities
Current liabilities
Accounts payable	400000
Total current liabilities	400000
Equity
Ordinary Share capital	2500000
Additional paid in capital	1500000
Retained earnings	1000000
Total equity	5000000
Total liabilities+equity	5400000

Finished Goods	=25% of COGS
	=0.25*1800000
	450000
WIP	=33.33% of Finished goods
	=0.33333*450000
	150000
Total Manufatcured units
COGS	1800000
Finished goods	450000
WIP	150000
	2400000
Materials	50%	=2400000*0.5	1200000
Labor	30%	=2400000*0.3	720000
Overheads	20%	=2400000*0.2	480000
Overhead Fixed			100000
Variable			380000
Materials
opening	0
Purchases	x
Used in manufacturing	1200000
Balance	0.25x
opening+purchases	=used in manufacturing (issued)+closing
x	=1200000+0.25x
x	=1200000/0.75
x	1600000
Inventory	=1600000*0.25
	400000
Accounts receivable	=10% of sales
	=0.10*4000000
	400000
Accounts payable	=25% of materials purchased
	=0.25*1600000
	400000

Cash
Opening	1000000
Materials purchased	-1200000
Cash received from sales	3600000
Cash paid for expenses	-1200000
Cash paid for Direct labor	-720000
Cash paid for overheads	-380000
Balance	1100000