Problem Solving Updates in Philippine Accounting And Financial Reporting Standards

Directions: Read and analyze the following activity and answer what is required.

Tender Loving Care Company provided the following balances on December 21, 2021:
Franchise 200,000
Goods in process 600,00
Building 4,000,000
Employees income tax payable 20,000
Prepaid insurance 20,000
Raw materials 200,000
Notes payable 100,000
Cash 420,000
Accounts receivable 500,000
Retained earnings 880,000
Finished goods 400,000
Accrued Expenses 30,000
Trading securities 250,000
Claim receivable 20,000
Machinery 2,000,000
Advance from customer 100,000
Tools 40,000
Goodwill 100,000
Accumulated Depreciation-Machinery 1,300,000
Allowance for doubtful account 50,000
Plant expansion fund 500,000
Serial bonds payable (500,000 due every 2,500,000
July 31 of each year
Accounts payable 300,000
Share capital 5,000,000
Accumulated Depreciation-Building 1,600,000
Income tax payable 60,000
Factory supplies 50,000
Share premium 500,000
Accrued interest on notes payable 10,000
Investment in bonds 1,500,000
Land 1,500,000
Notes Receivable 150,000
Required:
Prepare a properly classified statement of financial position on December 31, 2021

Answer:
Tender Loving Care Company
Statement of Financial Position
As of December 31, 2021

Assets
Current Assets
Cash P 420,000
Accounts Receivable 500,000
Allowance for doubtful accounts (50,000)
Trading Securities 250,000
Notes Receivable 150,000
Claim Receivable 20,000
Inventories:
Raw Materials P 200,000
Goods in Process 600,000
Finished Goods 400,000
Factory Supplies 50,000 1,250,000
Prepaid insurance 20,000
Total Current Assets P 2,560,000
Non-Current Assets
Property, Plant and Equipment:
Building P 4,000,000
Accumulated Depreciation- Building (1,600,000)
Machinery 2,000,000
Plant Expansion Fund 500,000
Accumulated Depreciation- Machinery (1,300,000)
Tools 40,000
Land 1,500,000 5,140,000
Goodwill 100,000
Non-Current Investments:
Franchise 200,000
Investments in bonds 1,500,000 1,700,000
Total Non-Current Assets P 6,940,000
Total Assets P 9,500,000
Liabilities and Shareholder's Equity
Current Liabilities
Accounts Payable P 300,000
Accrued Expenses 30,000
Accrued Interest on Notes Payable 10,000
Advance from Customers 100,000
Employees income tax payable 20,000
Income Tax Payable 60,000
Notes Payable 100,000
Serial Bonds-Current Portion 500,000
Total Current Liabilities
Non-Current Liabilities P 1,200,000
Serial Bonds-Non Current Portion P 2,000,000
 Total Non-Current Liabilities P 2,000,000
Total Liabilities P 3,120,000
Shareholder's Equity
Share Capital P 5,000,000
Share Premium 500,000
Retained Earnings 880,000
Total Shareholders' Equity P 6,380,000
Total Liabilities and Shareholder's Equity P 9,500,000

Alexa Company provided the following data for the current year:
Inventory end of the fiscal period as compared with balances at the beginning of the fiscal
period were as follows:
Finished goods 200,000 decrease
Goods in process 90,000 decrease
Raw materials 100,000 increase

Indirect labor 600,000

Factory taxes 130,000
Sales 8,000,000
Purchase 1,600,000
Office salaries 800,000
Freight in 80,000
Income tax expense 170,000
Depreciation-machinery 50,000
Advertising 120,000
Office supplies expense 30,000
Factory Superintendence 480,000
Direct labor 1,480,000
Factory heat, light and power 220,000
Doubtful account 100,000
Factory supplies expense 120,000
Sales salaries 520,000
Delivery expense 160,000
Factory maintenance 150,000
Required:
Prepare an income statement for the current year supported by a schedule of cost goods
manufactured.
Answer:
Alexa Company
Statement of Cost of Goods Manufactured
For the fiscal year ended

Direct Materials
Purchases P 1,600,000
Freight in 80,000
Total direct materials P 1,680,000
Increase in raw materials (100,000)
Direct materials used P 1,580,000
Direct labor 1,480,000
Manufacturing overhead
Indirect labor 600,000
Depreciation-machinery 50,000
Factory taxes 130,000
Factory supplies expense 120,000
Factory superintendence 480,000
Factory maintenance 150,000
Factory heat, light & power 220,000
Total manufacturing overhead 1,750,000
Total manufacturing cost P 4,810,000
Decrease in goods in process 600,000
Cost of goods manufactured P 5,410,000

Alexandria Company
Income Statement
For the fiscal year ended

Sales P 8,000,000
Cost of goods sold
COGM P 5,410,000
Decrease in finished goods 200,000 (5,610,000)
Gross Margin P 2,390,000
Operating expenses:
Selling expenses
Sales salaries 520,000
Advertising 120,000
Delivery expense 160,000 P 800,000
Administrative expense:
Office supplies expenses 30,000
Office salaries 800,000
 Doubtful account 100,000 P 930,000 ( P 1,730,000)
Income before tax P 660,000
Income tax expense ( 170,000 )
Net Income P 490,000