FABRO, Aienna Gabrielle A.

BSA- BAB
ASSIGNMENT 1: FAR
NUMBER 1: Problem 2 on page 391 - 392
Problems 2. The following information were obtained from the records of Sunshine Enterprises for
the current year ended December 31, 2012:
Cash P 19,800
Accounts Receivable 44,000
Accounts Payable 22,350
Direct Materials January 1 70,000
December 31 80,000
Work in Process January 1 15,000
December 31 42,000
Finished Goods January 1 109,900
December 31 155,000
Indirect Labor 50,000
Direct Labor 142,500
Factory Supplies Used 30,000
Freight in 9,000
Advertising Expense 16,000
Sales Salaries 25,000
Administrative Salaries 41,000
Bad Debts Expense 5,000
Allowance for Bad Debts 3,100
Direct Material Purchases 137,500
Direct Material Returns 6,500
Sales 471,000
a) Prepare a statement of cost of goods manufactured.
Answer:
Sunshine Enterprises
Statement of Cost of Goods Manufactured
For the year ended December 31, 2012
Debit Credit
Direct Materials Inventory, January 1 P 70,000
Add: Net Cost of Purchases
Direct Materials Purchases 137,500
Freight In 9,000
Total P 216,500
Less: direct Materials Returns ( 6,500)
Total Materials Available for Use P 210,000
Less: direct Materials Inventory, December 31 ( 80,000)
Raw Materials Used P 130,000
Direct Labor 142,500
Manufacturing Expense
Indirect Labor P50,000
Factory Supplies Used 30,000
Factory Utilities 15,000
Factory Taxes 21,000
Factory Insurance 6,000
Factory Depreciation 18,000 140,000
Total Manufacturing Cost P 412,500
Add: Work in Process, January 1 15,000
Total cost Place in Process P 427,500
Less: work in Process, December 31 ( 42,000)
Cost of Goods Manufactured P 385,500

b) Prepare an income statement, tax rate is 30%

Answer:
Selling Expenses Administrative Expenses
Sales Salaries P 25,000 Bad Debts Expense P 5,000
Advertising Expenses 16,000 Administrative Salaries 41,000
Utilities Expense 2,500 Utilities Expense 7,500
Taxes Expense 8,750 Taxes Expense 5,250
Insurance Expense 2,000 Insurance Expense 2,000
Depreciation Expense 6,000 Depreciation Expense 6,000
Total P 60,250 Total P 66,750
FABRO, Aienna Gabrielle A.
BSA- BAB
ASSIGNMENT 1: FAR
Sunshine Enterprises
Income Statement
For the year ended December 21, 2012
Debit Credit
Sales P 471,000
Less: cost of goods Sold (340,400)
Gross Profit P 130,600
Less: Operating Expense
Selling Expenses P 60,250
Administrative Expenses 66,750
Total Operating Expense (127,000)
Net Income before Tax P 3,600
Less: 30% Tax (1,080)
Net Income P 2,520

NUMBER 2: Exercise 1 and 2 on page 387

Exercise 1. Identify the cost element (direct material, direct labor, factory overhead) in each of the
following:
a) fruit for ice cream f) meat for corned beef
b) tools used g) heat, light, and water
c) wages of supervisor h) sugar for ice cream
d) wages of cutter i) dry ice for packing
e) oil for machines j) perfume bottles

Answer:

a) Direct Material f) Direct Material

b) Factory Overhead g) Factory Overhead
c) Direct Labor h) Direct Material
d) Direct Labor i) Direct Material
e) Direct Material j) Direct Material

Exercise 2. The following accounts are found in the ledger of Bataan Leather Factory:
a) Depreciation of Machinery k) Sales Commission
b) Bad Debts l) Office Supplies Used
c) Power Expense m) Delivery Truck- Insurance Expense
d) Building Insurance Expense n) Janitorial Services
e) Factory Repairs o) Depreciation of Office Equipment
f) Legal Expenses p) Factory Supervisor’s Salary
g) Freight Out q) Representation Expense of the Company
h) Advertising Expense President
i) Depreciation of Building r) Factory Supplies Used
j) Freight In s) Water Expense

a) Identify if the direct costs of the manufacturing department, distribution department, and
administrative department.
b) There are costs which are common to all departments. What are these and how will you
allocate these costs?

STEP 1: Identify whether the costs are direct costs or common costs.
Answer:

a) Direct Cost k) Direct Cost

b) Direct Cost l) Direct Cost
c) Common Cost m) Direct Cost
d) Common Cost n) Common Cost
e) Direct Cost o) Direct Cost
f) Direct Cost p) Direct Cost
g) Direct Cost q) Common Cost
h) Direct Cost r) Direct Cost
i) Common Cost s) Common Cost
j) Direct Cost
FABRO, Aienna Gabrielle A.
BSA- BAB
ASSIGNMENT 1: FAR
STEP 2: Identify if the direct costs of the manufacturing department, distribution department, and
administrative department.
DIRECT COST
Manufacturing Distribution Administrative
Depreciation of Machinery ✔️
Bad Debts ✔️
Factory Repairs ✔️
Freight Out ✔️
Advertising Expense ✔️
Freight In ✔️
Sales commission ✔️
Office Supplies Used ✔️
Delivery Truck – Insurance Expense ✔️
Depreciation of Office Equipment ✔️
Factory Supervisor’s Salary ✔️
Factory Supplies Used ✔️
STEP 3: There are costs which are common to all departments. What are these and how will you
allocate these costs?
Answer: Common costs are listed at the left side of the table; I will allocate these Costs Based on the
percentage of how much each department contributes to each expense.
LEATHER FACTORY: leather is extremely energy and water intensive to produce
COMMON COST (M, D, A, Estimates Based on the ff. reasons: )
Based on Manufacturing Distribution Administrative
Power Expense Kilowatt Hour 60% 10% 30%
Legal Expenses No. of Persons 60% 20% 20%
Building Insurance Expense Floor Space 60% 20% 20%
Depreciation of Building Floor Space 60% 10% 30%
Janitorial Expense Floor Space 50% 20% 30%
Representation Expense of the No. of Persons 20% 20% 60%
company President
Water Expense Centum Cubic 60% 10% 30%
Feet
NUMBER 3: Prepare the statement of Financial Position / balance Sheet for Reyes
manufacturing
Reyes Manufacturing
Adjusted Trial Balance
For the year ended December 31, 2020
Debit Credit
Cash P 80,000
Accounts Receivable 115,000
Allowance for Doubtful Accounts P 15,000
Finished Goods Inventory 40,000
Work in Process Inventory 30,000
Raw materials Inventory 20,000
Prepaid rent 10,000
Supplies on Hand 8,000
Store Furniture and Equipment 280,000
Accumulated Depreciation, Store Furniture and Equipment 40,000
Office Furniture and Equipment 350,000
Accumulated Depreciation, Office Furniture and Equipment 60,000
Accounts Payable 60,000
Accrued Expenses 25,000
Notes Payable 50,000
Mortgage Payable (due 2024) 120,000
Loans Payable (due 2023) 80,000
Reyes, Capital 573,000
Reyes, Drawing 90,000
Sales 1,250,000
Sales Returns and Allowances 20,000
Sales Discount 12,000
Purchases 532,000
Purchase Discount 12,000
FABRO, Aienna Gabrielle A.
BSA- BAB
ASSIGNMENT 1: FAR
Purchase Returns and Allowances. 28,000
Freight in 35,000
Freight out 22,000
Direct labor 220,000
Advertising Expense 30,000
Sales Salaries 75,000
Office Salaries 90,000
Supplies Expense 15,000
Commissions Expense 25,000
Depreciation Expense, Store Furniture and Equipment 35,000
Depreciation Expense, Office Furniture and Equipment 45,000
Utilities Expense 60,000
Rent Expense 40,000
Insurance Expense 24,000
Doubtful Accounts Expense 10,000
P 2,313,000 P 2,313,000
Additional Information -
1. Utilities, Rent, Supplies and Insurance are
allocated: 50% factory; 30% Selling and
Administrative 20 %
2. Inventories, End:
Finished Goods P 30,000
Work in process 25,000
Direct materials 15,000
Answer:
Reyes Manufacturing
Statement of Financial Position
For the year ended December 31, 2020
ASSETS
Current Assets:
Cash 80,000.00
Accounts Receivable 115,000.00
Allowance for Doubtful Accounts (15,000.00)
Finished Goods Inventory 40,000.00
Work in Process Inventory 30,000.00
Raw Materials Inventory 20,000.00
Prepaid Rent 10,000.00
Supplies on Hand 8,000.00
Total Current assets 288,000.00
Long term assets:
store furniture and equipment 280,000.00
accumulated depreciation, store furniture and equipment (40,000.00)
office furniture and equipment 350,000.00
accumulated depreciation, office furniture and equipment (60,000.00)
Total Assets 818,000.00

LIABILITIES AND OWNER’S EQUITY

Current liabilities
accounts payable 60,000.00
accrued expenses 25,000.00
notes payable 50,000.00
Total Current Liabilities 135,000.00
Long-term liabilities
mortgage payable (due 2024) 120,000.00
Loans Payable (Due 2023) 80,000.00
total Liabilities 335,000.00
Owner's Equity
Reyes, Capital 573,000.00
Reyes, Drawing (90,000.00)
Total Liabilities and Owner's Equity 818,000.00