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Financial StatementsLanz Company was organized on January 1, 2011 with 25,000 shares of P100 par value ordinary shares being issued in exchange for property, plant and equipment valued at P3,000,000 and cash of P1,000,000. The following summarizes the activities for the year: Net income for the peri...

Description

Financial Statements Lanz Company was organized on January 1, 2011 with 25,000 shares of P100 par value ordinary shares being issued in exchange for property, plant and equipment valued at P3,000,000 and cash of P1,000,000. The following summarizes the activities for the year: 1. 2. 3.

Net income for the period ending December 31, 2011 was P1,000,000 Raw materials on hand on December 31 were equal to 25% of raw materials purchased. Manufacturing costs were distributed as follows: Materials Direct labor Factory overhead

4. 5. 6. 7. 8. 9.

50% 30% 20% (includes depreciation of building P100,000)

Goods remaining in process in the factory on December 31 were equal to 33 1/3 of the goods finished and transferred to stock. Finished goods remaining in stock were equal to 25% of the cost of goods sold. Expenses were 30% of sales. Cost of goods sold was 150% of the expenses total. Ninety percent of sales were collected. The balance was considered collectible. Seventy-five percent of the raw materials purchased were paid for. There were no expense accruals or prepayments at the end of the year.

Solution Guide: Lanz Company Income statement Year ended December 31, 20AA Sales Cost of goods sold Gross income Operating expenses Net income

Computation: Purchases Raw materials inventory, 12/31 Raw materials used Direct labor Factory overhead Total manufacturing cost Good in process inventory 12/31 Costs of goods manufactured Finished goods inventory 12/31 Cost of goods sold

P

4,000,000 (1,800,000) P 2,200,000 (1,200,000) P 1,000,000 ===============

P

1,600,000 (400,000) P 1,200,000 720,000 480,000 P 2,400,000 (150,000) P 2,250,000 (450,000) P 1,800,000 ===============

Lanz Company Statement of Financial Position December 31, 20AA Current Asset: Cash Accounts Receivable Inventories Total Current assets

P 1,000,000 400,000 1,100,000 P

Noncurrent assets: Property, plant and equipment Total Assets

2,900,000 P 5,400,000 ===============

Current Liability: Accounts payable Equity: Ordinary shares Share premium Retained earnings Total equity Total liabilities and equity

2,500,000

P

400,000

P 2,500,000 1,500,000 1,000,000 5,000,000 P 5,400,000 ===============...