ACTBFAR

Pro-Forma Financial Statements (Manufacturing Concern)

(Source: Basic Financial Accounting and Reporting by Dela Cruz, Rabo, & Tugas)

Functional-form Income Statement:

XYZ MANUFACTURING
Income Statement
For the fiscal year ended January 31, 2021

Note
Net sales revenue 1 ₱ xxx
Cost of sales 2 ( xx)
Gross profit ₱ xxx
Interest Income xx*
Total income ₱ xxx
Operating expenses:
Distribution costs 3 ₱ xx
Administrative expenses 4 xx ( xx)
NET INCOME (NET LOSS) ₱ xx
*Since there is only one account under this category, it is not required to provide a supporting
note; Preparers may immediately change the category name to the account title.

Statement of Changes in Equity:

XYZ MANUFACTURING
Statement of Changes in Equity
For the fiscal year ended January 31, 2021

Owner, Capital, February 1, 2020 ₱ xxx

Net income xx*
Sub-total ₱ xxx
Owner, Drawing ( xx)
OWNER, CAPITAL, JANUARY 31, 2021 ₱ xxx
*This assumes that operations during the year resulted to a net income. If there was a net loss,
this will be deducted from Owner, Capital, beginning balance to get ending balance.
Report-form Statement of Financial Position:
XYZ MANUFACTURING
Statement of Financial Position
January 31, 2021

Note
ASSETS
Current Assets:
Cash ₱ xx
Investments in Trading Securities xx
Trade and other receivables 5 xx
Inventories 6 xx
Prepaid expenses 7 xx
Total current assets ₱ xxx

Non-current Assets:
Property, plant, and equipment 8 xx

TOTAL ASSETS ₱ xxx

LIABILITIES AND OWNER’S EQUITY

Current Liabilities:
Trade and other payables 9 ₱ xx

Non-current Liabilities
Notes Payable – due in three years xxx

Total liabilities ₱ xxx

Owner’s equity
Owner, Capital xxx

TOTAL LIABILITIES AND OWNER’S EQUITY ₱ xxx

Notes to Financial Statements (In this document, notes refer to supporting schedules and
the numbering starts from the income statement to the statement of financial position) :

Note 1 – Net sales revenue

Sales ₱ xxx
Less: Sales Returns and Allowances ₱ xx
Sales Discount xx xx
NET SALES REVENUE ₱ xxx

Note 2 – Cost of sales

Cost of direct materials used:
Raw Materials Inventory, beginning ₱ xx
Add: Cost of raw materials purchases xxx
Total cost of raw materials available for use ₱ xxx
Less: Raw Materials Inventory, end xx ₱ xxx
Direct labor cost xx
Manufacturing overhead cost – applied at _________ xx*
Total manufacturing costs ₱ xxx
Add: Work-in-Process Inventory, beginning xx
Total cost of goods placed into process ₱ xxx
Less: Work-in-Process Inventory, end xx
Cost of goods manufactured ₱ xxx
Add: Finished Goods Inventory, beginning xx
Cost of goods available for sale ₱ xxx
Less: Finished Goods Inventory, end xx
COST OF SALES ₱ xx
*This assumes normal cost system and therefore manufacturing overhead cost should be
applied based on an activity. Examples of activity base are direct labor hours, direct labor cost,
and machine hours. For actual cost system, the actual manufacturing overhead costs are listed
down preferably according to magnitude in order to easily identify the highest overhead costs
and make certain decisions based on this information. The cost of sales would then be as
follows (see next page):
Note 2 – Cost of sales
Cost of direct materials used:
Raw Materials Inventory, beginning ₱ xx
Add: Cost of raw materials purchases xxx
Total cost of raw materials available for use ₱ xxx
Less: Raw Materials Inventory, end xx ₱ xxx
Direct labor cost xx
Manufacturing overhead cost*:
Indirect labor cost ₱ xx
Factory utilities xx
Factory rent xx
Depreciation on factory equipment xx
Cost of indirect materials used xx
Other factory costs xx xx
Total manufacturing costs ₱ xxx
Add: Work-in-Process Inventory, beginning xx
Total cost of goods placed into process ₱ xxx
Less: Work-in-Process Inventory, end xx
Cost of goods manufactured ₱ xxx
Add: Finished Goods Inventory, beginning xx
Cost of goods available for sale ₱ xxx
Less: Finished Goods Inventory, end xx
COST OF SALES ₱ xx
*These are arranged from highest to lowest, except miscellaneous or other factory costs.

Note 3 – Distribution costs

Sales Salaries and Commission ₱ xx
Utilities Expense – store xx
Rent Expense – store xx
Depreciation Expense – Store Equipment xx
Store Supplies Used xx
Miscellaneous Distribution Costs xx
TOTAL DISTRIBUTION COSTS ₱ xx

Note 4 – Administrative expenses

Office Salaries Expense ₱ xx
Utilities Expense – office xx
Rent Expense – office xx
Depreciation Expense – Office Equipment xx
Office Supplies Used xx
Taxes and Licenses Expense xx
Doubtful Accounts Expense xx
Miscellaneous Administrative Expenses xx
TOTAL ADMINISTRATIVE EXPENSES ₱ xx
Note 5 – Trade and other receivables
Accounts Receivable ₱ xx
Less: Allowance for Doubtful Accounts xx ₱ xx
Notes Receivable xx
TOTAL TRADE AND OTHER RECEIVABLES ₱ xx

Note 6 – Inventories
Raw Materials Inventory ₱ xx
Work-in-Process Inventory xx
Finished Goods Inventory xx
TOTAL INVENTORIES ₱ xx

Note 7 – Prepaid expenses

Prepaid Rent Expense ₱ xx
Office Supplies Unused xx
Store Supplies Unused xx
TOTAL PREPAID EXPENSES ₱ xx

Note 8 – Property, plant, and equipment

Factory Equipment ₱ xx
Less: Accumulated Depreciation – Factory Equipment xx ₱ xx
Store Equipment ₱ xx
Less: Accumulated Depreciation – Store Equipment xx xx
Office Equipment ₱ xx
Less: Accumulated Depreciation – Office Equipment xx xx
TOTAL CARRYING AMOUNT ₱ xx

Note 9 – Trade and other payables

Accounts Payable ₱ xx
Salaries Payable xx
TOTAL TRADE AND OTHER PAYABLES ₱ xx