Determine the following: 7. Sales for the year ended December 31, 2020 8. Total manufacturing cost for the year ended December 31, 2020 9. Cost of goods sold for the year ended December 31, 2020
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
![Digos Company was organized on January 1, 2020. On the same date, 25,000, P100 par value,
ardinary shares were issued in exchange for property, plant and equipment valued at P3,000,000
and cash of P1,000,000. The following data summarizes the activities for 2020:
a. Profit for the year ended December 31, 2020 was P1,000,000.
b. Raw materials on hand on December 31 were equal to 25% of raw materials purchased.
c. Manufacturing costs were distributed as follows:
Materials used
50%
Direct labor
30%
Factory overhead
20% (includes depreciation of building P100,000)
d. Goods in process remaining in the factory on December 31 were equal to 1/3 of the goods
finished and transferred to stock.
e. Finished goods remaining in stock on December 31 were equal to 25% of the cost of goods
sold.
f. Operating expenses were 30% of sales.
g. Cost of goods sold was 150% of the operating expenses.
h. Ninety percent of sales were collected during 2020. The balance was considered collectible.
i. Seventy five percent of the raw materials purchased were paid for. There were no expense
accruals or prepayments at the end of the year.
Determine the following:
7. Sales for the year ended December 31, 2020
8. Total manufacturing cost for the year ended December 31, 2020
9. Cost of goods sold for the year ended December 31, 2020
10, Total current assets as of December 31, 2020
11. Total liabilities and equity as of December 31, 2020](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8d7e20d6-450d-4bc0-95b7-9fb564718c2d%2F93f607d8-9f24-458a-8009-e5816510f7da%2Fy2mp2ec_processed.jpeg&w=3840&q=75)
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