EXERCISE 7

( FINDING UNKNOWN
BALANCES)
 CASE 1 CASE 2
Account Receivable, December 31,20x1 P6,000 P2,100
Cost of good sold A 20,000
Accounts payable, January 1, 20x1 3,000 1,700
Accounts payable, December 31, 20x1 1,800 1,500
Finished goods inventory, December 31, 20x1 B 5,300
Gross margin 11,300 C
Work in process, January 1, 20x1 0 800
Work in process, December 31, 20x1 0 3,000
Finished goods inventory, January 1, 20x1 4,000 4,000
Direct material used 8,000 12,000
Direct manufacturing labor 3,000 5,000
Indirect manufacturing cost 7,000 D
Purchase of direct material 9,000 7,000
Revenues 32,000 31,800
Accounts Receivable, January 1,20x1 2,000 1,400
 CASE 1
Account Receivable, December 31,20x1 P6,000 SOLUTION: Let G= given
SOLUTION: I= Inferred
Cost of good sold A
Accounts payable, January 1, 20x1 3,000
Step 1:
Accounts payable, December 31, 20x1 1,800 STEP 1: USE GROSS MARGIN FORMULA
Finished goods inventory, December 31, B
20x1
Gross margin 11,300
Work in process, January 1, 20x1 0
Work in process, December 31, 20x1 0 CASE 1
Finished goods inventory, January 1, 20x1 4,000
REVENUES 32,000 (G)
Direct material used 8,000
Direct manufacturing labor 3,000 less: Cost of good sold A? (I)
20,700
Indirect manufacturing cost 7,000
Gross margin 11,300 (G)
Purchase of direct material 9,000
Revenues 32,000
Accounts Receivable, January 1,20x1 2,000
 CASE 1 STEP 2: USE SCHEDULE OF COST OF
Account Receivable, December 31,20x1 P6,000 GOODS MANUFACTURED FORMULA
Cost of good sold A
Accounts payable, January 1, 20x1 3,000
CASE 1
Accounts payable, December 31, 20x1 1,800
Finished goods inventory, December 31, B Direct material used 8,000 (G)
20x1
Gross margin 11,300 Direct manufacturing labor cost 3,000 (G)
Work in process, January 1, 20x1 0
Indirect manufacturing cost 7,000 (G)
Work in process, December 31, 20x1 0
Finished goods inventory, January 1, 20x1 4,000 Manufacturing cost incurred (I)
18,000
Direct material used 8,000 Add: Beg. Work in process,1/11 0 (G)
Direct manufacturing labor 3,000
Indirect manufacturing cost 7,000 Total manufacturing cost to account for 18,000 (I)
Purchase of direct material 9,000
Less: Ending work in process, 12/1 0 (G)
Revenues 32,000
Accounts Receivable, January 1,20x1 2,000 Cost of good manufactured 18,000 (I)
 CASE 1
Step 1 CASE 1
Account Receivable, December 31,20x1 P6,000
REVENUES 32,000 (G)
Cost of good sold A
less: Cost of good sold A? 20,700 (I)
Accounts payable, January 1, 20x1 3,000 STEP 3: USE OF COST OF GOOD SOLD
Gross margin 11,300 (G)
Accounts payable, December 31, 20x1 1,800 FORMULA
Finished goods inventory, December 31, B
Step 2
20x1 CASE 1

Gross
Directmargin
material used 11,300 (G)
8,000
Work in process, January 1, 20x1 0
Direct manufacturing labor cost 3,000 (G) CASE 1
Work in process, December 31, 20x1 0
Indirect manufacturing
Finished cost
goods inventory, January 1, 20x1 7,0004,000 (G) Beg. Finished goods inventory,1/11 4,000 (G)
Manufacturing cost incurred 18,000 (I) 18,000
Direct material used 8,000 Cost of goods manufactured (I)
Add: Beg. Work in process,1/11 0 (G)
Direct manufacturing labor 3,000 Cost of goods available for sale 22,000 (I)
Total manufacturing
Indirect cost
manufacturing to account for
cost 18,000
7,000 ( I)
Purchase of direct Less: Ending finished goods B? (I)
Less: Ending workmaterial
in process, 12/1 0 9,000 (G) 1,300
inventory,12/31
Revenues 32,000
Cost of good manufactured 18,000 (I) Cost of good sold (I)
Accounts Receivable, January 1,20x1 2,000 20,700
 CASE 1

A. COST OF GOOD SOLD 20,700

B. Finished Goods inventory, 12/31 1,300

 CASE 1 CASE 2
Account Receivable, December 31,20x1 P6,000 P2,100
Cost of good sold 20,700 20,000
Accounts payable, January 1, 20x1 3,000 1,700
Accounts payable, December 31, 20x1 1,800 1,500
Finished goods inventory, December 31, 20x1 1,300 5,300
Gross margin 11,300 C
Work in process, January 1, 20x1 0 800
Work in process, December 31, 20x1 0 3,000
Finished goods inventory, January 1, 20x1 4,000 4,000
Direct material used 8,000 12,000
Direct manufacturing labor 3,000 5,000
Indirect manufacturing cost 7,000 D
Purchase of direct material 9,000 7,000
Revenues 32,000 31,800
Accounts Receivable, January 1,20x1 2,000 1,400
 CASE 2
Account Receivable, December 31,20x1 P2,100 SOLUTION: Let G= given
I= Inferred
Cost of good sold 20,000
Accounts payable, January 1, 20x1 1,700
Accounts payable, December 31, 20x1 1,500 STEP 1: USE GROSS MARGIN FORMULA
Finished goods inventory, December 31, 5,300
20x1
Gross margin C
Work in process, January 1, 20x1 800
Work in process, December 31, 20x1 3,000 CASE 2

Finished goods inventory, January 1, 20x1 4,000

REVENUES 31,800 (G)

Direct material used 12,000

less: Cost of good sold 20,000 (G)
Direct manufacturing labor 5,000
Indirect manufacturing cost D Gross margin C? 11,800 (I)
Purchase of direct material 7,000
Revenues 31,800
Accounts Receivable, January 1,20x1 1,400
 CASE 2
Account Receivable, December 31,20x1 P2,100

Cost of good sold 20,000

Accounts payable, January 1, 20x1 1,700 STEP 3: USE OF COST OF GOOD SOLD
Accounts payable, December 31, 20x1 1,500 FORMULA
Finished goods inventory, December 31, 5,300
20x1
Gross margin C
Work in process, January 1, 20x1 800 CASE 2
Work in process, December 31, 20x1 3,000
Beg. Finished goods inventory,1/11 4,000 (G)
Finished goods inventory, January 1, 20x1 4,000
Cost of goods manufactured (I)
Direct material used 12,000 21,300
Direct manufacturing labor 5,000 Cost of goods available for sale 25,300 (I)
Indirect manufacturing cost D
Less: Ending finished goods 5,300 (G)
Purchase of direct material 7,000
inventory,12/31
Revenues 31,800
Cost of good sold 20,000 (G)
Accounts Receivable, January 1,20x1 1,400
 CASE 2 STEP 2: USE SCHEDULE OF COST OF
Account Receivable, December 31,20x1 P2,100 GOODS MANUFACTURED FORMULA
Cost of good sold 20,000
Accounts
STEP 3 payable, January 1, 20x1 CASE 21,700
CASE 2
Accounts payable, December 31, 20x1 1,500
Beg. Finished goods inventory,1/11 4,000 (G)
Finished goods inventory, December 31, 5,300 Direct material used 12,000 (G)
20x1
Cost of goods manufactured 21,300 (I)
Gross margin C Direct manufacturing labor cost 5,000 (G)
Cost in
Work of process,
goods available
January for sale
1, 20x1 25,300800 (I)
Indirect manufacturing cost D? (I)
Work in process, December 31, 20x1 3,000 6,500
Less: Ending finished goods 5,300 (G)
Finished goods inventory, January 1, 20x1
inventory,12/31 4,000 Manufacturing cost incurred 23,500 (I)
Cost of
Direct good sold
material used 20,000 (G)
12,000
Add: Beg. Work in process,1/11 800 (G)
Direct manufacturing labor 5,000
Indirect manufacturing cost D Total manufacturing cost to account for (I)
24,300
Purchase of direct material 7,000
Revenues 31,800 Less: Ending work in process, 12/31 3,000 (G)

Accounts Receivable, January 1,20x1 1,400

Cost of good manufactured 21,300 (I)
 CASE 1 CASE 2

A. COST OF GOOD SOLD 20,700

B. Finished Goods inventory, 12/31 1,300

C. Gross margin 11,800

D. Indirect manufacturing cost 6,500

 CASE 1 CASE 2
Account Receivable, December 31,20x1 P6,000 P2,100
Cost of good sold 20,700 20,000
Accounts payable, January 1, 20x1 3,000 1,700
Accounts payable, December 31, 20x1 1,800 1,500
Finished goods inventory, December 31, 20x1 1,300 5,300
Gross margin 11,300 11,800
Work in process, January 1, 20x1 0 800
Work in process, December 31, 20x1 0 3,000
Finished goods inventory, January 1, 20x1 4,000 4,000
Direct material used 8,000 12,000
Direct manufacturing labor 3,000 5,000
Indirect manufacturing cost 7,000 6,500
Purchase of direct material 9,000 7,000
Revenues 32,000 31,800
Accounts Receivable, January 1,20x1 2,000 1,400
THANKIESSS!!!