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: 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 50% Direct labor 30% Factory overhead 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 P Cost of goods sold ___ _____ Gross income P Operating expenses ___ __ __ Net income P =============== Computation: Purchases P Raw materials inventory, 12/31 _______________ Raw materials used P Direct labor Factory overhead _______________ Total manufacturing cost P Good in process inventory 12/31 _______________ Costs of goods manufactured P Finished goods inventory 12/31 _______________ Cost of goods sold P =============== Lanz Company Statement of Financial Position December 31, 20AA Current Asset: Cash P Accounts Receivable Inventories ________________ Total Current assets P Noncurrent assets: Property, plant and equipment _ ______ Total Assets P =============== Current Liability: Accounts payable P Equity: Ordinary shares P Share premium Retained earnings _________________ Total equity _______________ Total liabilities and equity P ===============

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: 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 50% Direct labor 30% Factory overhead 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 P Cost of goods sold _ _ Gross income P Operating expenses _ Net income P =============== Computation: Purchases P Raw materials inventory, 12/31 _______ Raw materials used P Direct labor Factory overhead _ Total manufacturing cost P Good in process inventory 12/31 _ Costs of goods manufactured P Finished goods inventory 12/31 _ Cost of goods sold P =============== Lanz Company Statement of Financial Position December 31, 20AA Current Asset: Cash P Accounts Receivable Inventories __________ Total Current assets P Noncurrent assets: Property, plant and equipment _ Total Assets P =============== Current Liability: Accounts payable P Equity: Ordinary shares P Share premium Retained earnings _ Total equity _____ Total liabilities and equity P ===============

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Financial Statements

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 50%

Direct labor 30%

Factory overhead 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	P
Cost of goods sold	___ _____
Gross income	P
Operating expenses	___ __ __
Net income	P
	===============

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

Lanz Company

Statement of Financial Position

December 31, 20AA

Current Asset:
Cash	P
Accounts Receivable
Inventories	________________
Total Current assets		P

Noncurrent assets:
Property, plant and equipment		_ ______
Total Assets		P
		===============
Current Liability:
Accounts payable		P

Equity:
Ordinary shares	P
Share premium
Retained earnings	_________________
Total equity		_______________
Total liabilities and equity		P
		===============

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