Actbfar Unit 1 Manufacturing Part 3 PDF

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UNIT 1: ACCOUNTING FOR MANUFACTURING1 Financial statements of a manufacturing concern1.3 Functional-form Income statementCompany name Statement of Profit & Loss for the _____ ended _______________Notes Php Php Net sales revenue 1 xxx Cost of sales 2 (xxx) Gross profit xxx Other income* 3 xxx...

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UNIT 1: ACCOUNTING FOR MANUFACTURING 1.3 Financial statements of a manufacturing concern 1.3.1 Functional-form Income statement Company name Statement of Profit & Loss for the _____ ended _______________ Notes

Net sales revenue Cost of sales Gross profit Other income* Total income Operating expenses Distribution costs General & Administrative expenses Finance costs Net income (loss)

Php

1 2 3

4 5 6

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1.3.2 Statement of changes in equity Company name Statement of Changes in Owner's Equity for the _____ ended _______________

Owner's name, Capital - beginning/opening/start of the year Additional investment Net income** Owner's name, Drawing Owner's name, Capital - end/closing/end of the year

*Other income includes revenue which is not from main line of business. ** If net loss, then show as negative amount together with the Drawings.

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1.3.3 Report-form Statement of financial position Company name

Statement of Financial Position as of ______________

Assets Current Assets Cash & Cash Equivalents Trade and Other Receivables Inventory Prepaid Expenses Non-Current Assets Property, Plant, & Equipment Total Assets

Liabilities and Equity Current Liabilities Trade and Other Payables Unearned Revenue Loans Payable - current portion Non-Current Liabilities Loans Payable - noncurrent portion Long Term Notes Payable Mortgage Payable Total Liabilities

Notes

Php

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7 8 9 10

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11

12 13

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Equity

Owner's name, Capital Total Liabilities and Equity

Note: Current Assets are listed in order of liquidity, its nearness to cash. Note: Liabilities are listed in order of due date, if can be provided. But with several liabilities under one line item, the list based on due date may not be followed. Just start with the Accounts Payable.

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Notes to Financial Statements Php 1 Sales Sales Returns & Allowances Sales Discounts Net Sales Revenue 2 Raw Materials Inventory, beginning/opening/start of the year Net cost of raw materials purchases Raw Materials Purchases* Raw Materials Purchase Returns & Allowances Raw Materials Purchase Discounts Net Raw Materials Purchases Freight In - Raw Materials Total cost of raw materials available for use Raw Materials Inventory, end/closing/end of the year Cost of direct materials used Direct labor cost Manufacturing overhead cost Indirect Materials Factory Supplies Salaries Expense - Factory managers and supervisors Salaries & Wages Expense - Factory cleaners; Forklift drivers; Stock Custodian Salaries & Wages Expense - Repair & Maintenance (factory and factory machine/equipment)

Salaries & Wages Expense - Research & Development; Quality Control Insurance Expense - Factory building & factory machinery/equipment Depreciation Expense - Factory building & factory machinery/equipment Repair & Maintenance Expense - Factory building & factory machinery/equipment Factory Utilities Other Factory Expenses Total manufacturing costs/Total production costs Work-in-Process Inventory, beginning/opening/start of the year Total cost of goods placed into process Work-in-Process Inventory, end/closing/end of the year Cost of goods manufactured Finished Goods Inventory, beginning/opening/start of the year Cost of goods available for sale Finished Goods Inventory, end/closing/end of the year Cost of goods sold/Cost of sales

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*Materials that are indirect in nature should be classified as MOH. 3 Rent Income / Rent Revenue Commissions Income / Commissions Revenue Interest Income / Interest Revenue Gain on Sale of PPE Decrease in Allowance for Doubtful Accounts Recovery of Bad Debts Other income

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4 Advertising; Marketing; Promotions; Trade Fairs; Exhibitions Depreciation Expense - Warehouse building; equipment; furniture Rent Expense - Warehouse building Repair & Maintetance Expense - Warehouse building; equipment; furniture Salaries & Wages Expense - Warehouse staff Warehouse Expenses (E.g. Warehouse Supplies Expense) Depreciation Expense - Store building; equipment; furniture Rent Expense - Store building Repair & Maintetance Expense - Store building; equipment; furniture Salaries & Wages Expense - Store sales staff Store Expenses (E.g. Store Supplies Expense) Freight out; Carriage Outwards; Delivery Fees Depreciation Expense - Delivery vehicles Gas - Delivery vehicles Other Expenses - Delivery vehicles (E.g. Repair Expense) Salaries & Wages Expense - Sales staff Commissions Expense - Sales staff Insurance Expense - Sales staff Transportation & Travel Expense - Sales staff Other Expenses - Sales staff Distribution costs/Selling expenses**

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**Expenses for selling and distributing the goods to the customers, such as expenses related to advertising, marketing, promotion; and expenses incurred inside the warehouse, store, and for delivery of goods. 5 Depreciation Expense - [Office] Building; Equipment; Furniture & Fixtures Depreciation Expense - Vehicles Doubtful Accounts Expense Debt Collection Expense Insurance Expense [Office] Supplies Expense Office Expenses Professional Fees (accounting; audit; legal) Rent Expense Repair & Maintenance Expense Representation & Entertainment Expense Salaries & Wages Expense Salaries & Wages Expense - Administration/office staff Employee Benefits Taxes & Licenses Expense Transportation & Travel Expense Utilities Expense Loss on Sale of PPE Miscellaneous Expenses / Other Expenses / Sundry Expenses General & Administrative expenses*** *** Expenses for the general administration of the business

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6 Interest Expense - Notes Payable Interest Expense - Notes Receivable Discounted Interest Expense - Loans Payable Interest Expense - Mortgage Payable Finance cost**** **** Mainly, interest expense

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Note: Expenses, except for Miscellaneous Expenses, are normally listed from highest to lowest amount.

7 Petty Cash Fund Revolving Fund Change Fund Bank _______ Bank _______ Treasury bills Commercial papers Certificate of deposits Cash & Cash Equivalents

Cash on hand Cash in bank

Cash equivalents

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Note: The examples provided are not exhaustive.

8 Accounts Receivable Allowance for Doubtful Accounts Notes Receivable Notes Receivable - Discounted Advances to Employees Accrued _____ Revenue / _____ Receivable Trade and other receivables 9 Raw Materials Work-in-Process Finished Goods Factory Supplies Inventory 10 Prepaid _____ Expense Warehouse Supplies Store Supplies [Office] Supplies Prepaid expenses Note: Prepayments that are expected to be used within the next 12 months should be classified as Current Assets. Prepayments that are expected to be used beyond one year should be classified as Non-Current Assets.

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11 Land Building - [Factory; Warehouse; Store; Office] Accumulated Deprectiation - Building Factory Machinery Accumulated Deprectiation - Factory Machinery Equipment [Factory; Warehouse; Store; Office] Accumulated Deprectiation - Equipment Vehicle [Factory; Warehouse; Store; Office] Accumulated Deprectiation - Vehicle Furniture & Fixtures [Factory; Warehouse; Store; Office] Accumulated Deprectiation - Furniture & Fixtures Total Carrying amount

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Note: PPE items are listed in order of estimated useful life, with the longest life first. Each building [factory, warehouse, store, office building] and its related Accumulated Depreciation is separately accounted for. The equipment, vehicle, furniture & fixtures in each building and its related Accumulated Depreciation is separately accounted for as well.

12 Accounts Payable Notes Payable - due within 1 year Accrued _____ Expense / _____ Payable Trade and other payables 13 Note: Only if there is more than one Unearned _____ Revenue item. Note: Precollections that are expected to be earned within the next 12 months should be classified as Current Liabilities. Precollections that are expected to be earned beyond one year should be classified as Non-Current Liabilities.

--Reminder: Mainly, if there is more than 1 account in a major line item, a note may be provided as a supporting schedule. E.g. It's possible to have several bank accounts, loans, etc.

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Costing system Actual cost system uses actual costs of direct materials, direct labor, and manufacturing overhead to determine total manufacturing costs Direct materials Direct labor Manufacturing overhead - actual Manufacturing costs

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Standard cost system uses standard [budgeted] costs of direct materials, direct labor, and manufacturing overhead to determine total manufacturing costs Direct materials - budgeted Direct labor - budgeted Manufacturing overhead - budgeted Manufacturing costs

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Applied cost system uses actual costs of direct materials and direct labor and assigns manufacturing overhead based on applied rates to determine total manufacturing costs Direct materials Direct labor Manufacturing overhead - applied Manufacturing costs

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Calculation of applied manufacturing overhead cost Total estimated overhead costs Total estimated activity level (based on cost driver*) Predetermined [estimated; applied] overhead rate Total actual activity level (based on cost driver used) Manufacturing overhead - applied

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*Cost driver = drives [affects; causes; influences; triggers] an activity to determine cost E.g. labor hours, machine hours; # of set-ups; # of materials requests; # of orders received

If the applied manufacturing overhead cost is used to determine manufacturing costs, the reported manufacturing overhead cost needs to be adjusted to reflect actual amounts. Calculation of over (under) applied manufacturing overhead cost Manufacturing overhead - applied Manufacturing overhead - actual Over (under) applied manufacturing overhead cost

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