JOURNAL ENTRIES - ACTUAL COST SYSTEM The following transactions of Lakay Manufacturers were incurred during the month of May. a. Materials purchases on account, P750,000. b. Purchase returns and allowances, P50,000. c. Payment of payroll: Total Earnings P655,000 Less: SSS premiums P17,500 Philhealth premiums 8,000 Pag-IBIG premiums 2,500 Withholding taxes 12,000 Advances to employees 65,000 Union dues 30,000 135,000 Net amount P520,000 d. Breakdown of the payroll: factory, 60% (Direct labor - 50%, Superintendence - 40%; Indirect labor - 10%); sales, 25%; and, office, 15%. e. Disbursements are made for the following: Insurance premiums - factory building and contents P2,500 Lubricants, rags, brooms and insecticide 800 Electricity bill 4,100 Water bill 900 f. Sales on account, P2,200,000. g. Sales returns and allowances, P60,000. h. The following are paid: Bond paper, pencils and other office supplies P1,500 TV and radio advertisements 6,000 Plastic bags, masking tapes and other store supplies 2,000 i. The employer's contributions for SSS, Philhealth and Pag-IBIG premiums are as follows: SSS- P20,000; Philhealth-P8,000; Pag-IBIG-P2,050) and EC premiums of P2,500. The total of these is distributed as follows: factory, 70%; sales, 15%; and office, 15%. j. Amounts due to SSS, Philhealth and Pag-IBIG premiums are remitted together with the employer's counterpart, including payable to BIR and Union. k. Collections from customers, P195,000. l. Depreciation is provided on: factory building, P15,000; factory machinery and equipment, P7,000; office furniture and equipment, P5,000; delivery van, P8,000; and, store furniture, P4,200. m. Accrual of salaries and wages: factory-P8,000 (direct labor); sales-P3,000; and, office- P2,500. n. The following ending inventories are taken up: Raw materials - P20,000; Work in process - P15,000; Finished goods - P19,000 o. The following beginning inventories are closed: Raw materials - P18,000; Work in process - P16,000; Finished goods - P10,000 p. The remaining manufacturing accounts are closed. q. The remaining nominal accounts are closed. r. The net income or net loss is transferred to accumulated profits. REQUIRED: Prepare journal entries for these transactions (with no explanations)
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.
The following transactions of Lakay Manufacturers were incurred during the month of May.
a. Materials purchases on account, P750,000.
b. Purchase returns and allowances, P50,000.
c. Payment of payroll:
Total Earnings P655,000
Less: SSS premiums P17,500
Philhealth premiums 8,000
Pag-IBIG premiums 2,500
Withholding taxes 12,000
Advances to employees 65,000
Union dues 30,000 135,000
Net amount P520,000
d. Breakdown of the payroll: factory, 60% (Direct labor - 50%, Superintendence - 40%; Indirect
labor - 10%); sales, 25%; and, office, 15%.
e. Disbursements are made for the following:
Insurance premiums - factory building and contents P2,500
Lubricants, rags, brooms and insecticide 800
Electricity bill 4,100
Water bill 900
f. Sales on account, P2,200,000.
g. Sales returns and allowances, P60,000.
h. The following are paid:
Bond paper, pencils and other office supplies P1,500
TV and radio advertisements 6,000
Plastic bags, masking tapes and other store supplies 2,000
i. The employer's contributions for SSS, Philhealth and Pag-IBIG premiums are as follows: SSS-
P20,000; Philhealth-P8,000; Pag-IBIG-P2,050) and EC premiums of P2,500. The total of these is
distributed as follows: factory, 70%; sales, 15%; and office, 15%.
j. Amounts due to SSS, Philhealth and Pag-IBIG premiums are remitted together with the
employer's counterpart, including payable to BIR and Union.
k. Collections from customers, P195,000.
l.
P7,000; office furniture and equipment, P5,000; delivery van, P8,000; and, store furniture,
P4,200.
m. Accrual of salaries and wages: factory-P8,000 (direct labor); sales-P3,000; and, office- P2,500.
n. The following ending inventories are taken up: Raw materials - P20,000; Work in process -
P15,000; Finished goods - P19,000
o. The following beginning inventories are closed: Raw materials - P18,000; Work in process -
P16,000; Finished goods - P10,000
p. The remaining manufacturing accounts are closed.
q. The remaining nominal accounts are closed.
r. The net income or net loss is transferred to
REQUIRED: Prepare journal entries for these transactions (with no explanations)
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