Xytus Cortero FMCC227

Problem 1
DIFFICULT COMPANY
Statement of Financial Position
As of December 31, 2009

Assets
Current Assets
Cash and cash
equivalents ₱ 800,000
Inventories
900,000
Office supplies
50,000
Prepaid rent 150,000
Accounts receivable
450,000

Total Current Assets

2,350,000
Non-current Assets
Property, plant and
equipment ₱ 5,600,000
Accumulated
Depreciation - PPE (1,200,000)
Long-term
investments 950,000
Intangibale
asset(Patent) 800,000
Total Non-current Assets 6,150,000

Total Assets ₱ 8,500,000

Liabilities

Current Liabilities

Accounts payable ₱ 350,000

Accrued expenses 100,000
Note payable, short-
term debt 200,000
Total Current Liabilities 650,000

Non-current Liabilities
 Note payable, long-
term debt ₱ 500,000
Mortgage payable,
due in 5 years 1,500,000
Total Non-current Liabilities 2,000,000

Total Liabilities 2,650,000

Owner's Equity
Owner's Equity
Share premium ₱ 500,000
Retained earnings 1,350,000
Share capital, P100 par 4,000,000
Total Owner's Equity
5,850,000

Total Liabilities and Owner's Equity ₱ 8,500,000

Problem 3
GOMBURZA Company
Schedule of Cost of Sales
For the year ended December 31, 2010

Cost of sales - Merchandising

Inventory, beg. ₱ 3,000,000
Purchases 9,000,000
Goods available for sale 12,000,000
Inventory, end. (900,000)
COGS 11,100,000
Write-off (1,050,000)
Total cost of sales ₱ 10,050,000

Problem 4
LATUNDAN Company
Schedule of Cost of Goods Manufactured
For the year ended December 31, 2010

Cost of goods manufactured

Cost of sales ₱ 240,000

FG Inventory, end. 360,000

Goods available for sale 600,000
FG Inventory, beg. (400,000)
Total cost of goods manufactured ₱ 200,000

Problem 6
GURANG Company
Income Statement
For the year ended December 31, 2010

Notes
Sales 1 ₱ 8,870,000
Cost of sales 2 (5,900,000)
GROSS PROFIT 2,970,000
Expenses:
Selling 3 690,000
Administrative 4 580,000
Uninsured flood loss 340,000 (1,610,000)
Income before tax 1,360,000
Income tax expense (360,000)
NET INCOME ₱ 1,000,000

Note 1: Sales
Sales ₱ 9,070,000
Sales returns and allowances (200,000)
Total sales ₱ 8,870,000

Note 2: Cost of Sales

Inventory, beg, ₱ 1,500,000
Purchases 5,750,000
Freight-in 150,000
Purchase discounts (100,000)
Net purchases 5,800,000
Good available for sale 7,300,000
Inventory, end. (1,400,000)
Cost of Sales ₱ 5,900,000

Note 3: Distribution costs (selling)

Sales salaries ₱ 500,000
Store supplies 80,000
Depreciation - store equipment 110,000
Distribution costs ₱ 690,000
Note 5: Administrative expenses
Officer's salaries ₱ 400,000
Depreciation - building 120,000
Office supplies 60,000
Administrative expenses ₱ 580,000
Problem 2
COMPLEX Company
Statement of Financial Position
As of December 31, 2009

Assets
Currents Assets Notes
Cash
₱ 420,000 Note 1: Trade and other receiva
Trading securities
250,000 N/R
Trade and other
receivables 1 620,000 A/R
Inventories 2 1,250,000 AFDA
Prepaid insurance
20,000 Claim receivable

Total trade and

other
Total Current Assets ₱ 2,560,000 receivables
Non-current Assets
Property, plant
and equipment 3 ₱ 4,640,000 Note 2: Inventories
Intangibles
4 300,000 RM
Long-term
intangibles 5 2,000,000 GIP

Total Non-current Assets 6,940,000 FG

Total Assets ₱ 9,500,000 Factory supplies
Liabilities Total Inventories
Current Liabilities
Total trade and
other payables 6 ₱ 620,000 Note 3: PPE

Serial bonds
payable - current
500,000 Land
Total Current Liabilities
Serial bonds 1,120,000 Building
payable - 2,000,000 Acc. Dep. - building
remaining
Total Liabilities ₱ 3,120,000 Machinery
Owner's Equity Acc. Dep. - machinery

Owner's Equity Tools

 Share capital ₱ 5,000,000 Total PPE
Retained Earnings
880,000
Share premium 500,000

Total Owner's Equity 6,380,000

Total Liabilities and Owner's Equity ₱ 9,500,000

(1) Functional
Problem 5 Method Problem 5
MELASON Company MELASO
Income Statement Income
For the year ended December 31, 2009 For the year ende

Notes INCOME
Sales 1 ₱ 7,700,000 Sales
Cost of sales (5,000,000) Other income
GROSS PROFIT 2 2,700,000 TOTAL INCOME
Other income 3 400,000
Distribution costs 4 (950,000) EXPENSES
Administrative expenses 5 (1,050,000) Net purchases
Other expenses 6 (100,000) Change in inventory
PROFIT FOR THE YEAR ₱ 1,000,000 Freight-out
Salesmen's commission
Officer's salaries
Note 1: Sales Depreciation
Sales 7,850,000 Other expenses
Sales returns and allowances (140,000) Income tax
Sales discounts (10,000) TOTAL EXPENSES
Total sales ₱ 7,700,000
PROFIT FOR THE YEAR
Note 2: Cost of Sales
Inventory, beg, ₱ 1,000,000
Purchases 5,250,000 Note 1: Sales
Freight-in 500,000 Sales

Purchase returns
and allowances (150,000) Sales returns and allowances
Purchase discount (100,000) 5,500,000 Sales discounts
TGAFS 6,500,000 Total sales
Inventory, end. (1,500,000)
Cost of Sales ₱ 5,000,000 Note 2: Other income
Dividend Revenue
Note 3: Other income Rental income
Dividend Revenue ₱ 150,000 Other income
Rental income 250,000
Other income ₱ 400,000 Note 3: Net purchases
Purchases
Note 4: Distribution costs Freight-in
Freight out ₱ 175,000 Purchase returns and allowanc
Salesmen's commission 650,000 Purchase discounts
Depreciation - store equipment 125,000 Net purchases
Distribution costs ₱ 950,000
Note 4: Change in inventory
Note 5: Administrative expenses Inventory, beg.
Officer's salaries ₱ 500,000 Inventory. end.
Depreciation - office equipment 300,000 Change in inventory - increase
Income tax 250,000
Administrative expenses ₱ 1,050,000 Note 5: Depreciation
Depreciation - office equipment
Note 6: Other expenses Depreciation - store quipment
Loss on sale of investment ₱ 50,000 Net depreciation
Loss on sale of equipment 50,000
Other expenses ₱ 100,000 Note 6: Other expenses
Loss on sale of investment
Loss on sale of equipment
Other expenses

Problem 7
GOLDILOCKS Company
Statement of Retained Earnings
For the year ended December 31, 2010

Retained earnings, 1/1 ₱ 2,600,000

Compensation of prior period accrued (500,000)
Correction of prior period error - credit 400,000
Beg, bal. (adjusted) 2,500,000
Net income (adjusted) 3,050,000
Stock dividend (700,000)
Loss on retirement of prefernce share (350,000)
Appropriated treaaury share (1,000,000)
Retained earnings, 12/31 ₱ 3,500,000
Net income for the year ₱ 3,000,000
Gain on life insurance settlement 450,000
Gain on early retirement of B/P 100,000
Loss from fire (50,000)
Loss on sale of equipment (250,000)
Goodwill impairment (200,000)
Adjusted net income ₱ 3,050,000
1: Trade and other receivables Note 4: Intangibles

₱ 150,000 Franchise ₱ 200,000

500,000 Goodwill 100,000

(50,000) Total Intangibles ₱ 300,000

20,000

₱ 620,000 Note 5: Long-term investments

Investment bonds ₱ 1,500,000

2: Inventories Plant expansion fund 500,000

₱ 200,000 Total long-term investments ₱ 2,000,000

600,000

400,000 Note 6: Trade and other payables

50,000 Notes payable ₱ 100,000
₱ 1,250,000 Accrued interest on N/P 10,000
Accounts payable 300,000

Employees income tax payable 20,000

₱ 1,500,000 Income tax payable 60,000

4,000,000 Advances on customers 100,000
ep. - building (1,600,000) Accrued expenses 30,000

2,000,000 Total trade and other payables ₱ 620,000

ep. - machinery (1,300,000)

40,000
 ₱ 4,640,000

(2) Natural
Method
MELASON Company
Income Statement
For the year ended December 31, 2009

Notes
1 ₱ 7,700,000
2 400,000
8,100,000

3 5,500,000
e in inventory 4 (500,000)
175,000
men's commission 650,000
500,000
5 425,000
6 100,000
250,000
L EXPENSES 7,100,000

IT FOR THE YEAR ₱ 1,000,000

₱ 7,850,000

returns and allowances (140,000)

(10,000)
₱ 7,700,000
2: Other income
end Revenue ₱ 150,000
250,000
₱ 400,000

3: Net purchases
₱ 5,250,000
500,000
ase returns and allowances (150,000)
ase discounts (100,000)
₱ 5,500,000

4: Change in inventory
₱ 1,000,000
1,500,000
ge in inventory - increase ₱ 500,000

5: Depreciation
ciation - office equipment ₱ 300,000
ciation - store quipment 125,000
epreciation ₱ 425,000

6: Other expenses
on sale of investment ₱ 50,000
on sale of equipment 50,000
₱ 100,000