Transcribed Image Text:Shrek & Fiona Company
Statement of Financial Position
As of December 31, 2020
Current Assets
Current Liabilities
Accounts Payable (N2)
Taxes Payable
Cash
18,000
240,000
Accounts Receivable (N1)
1,192,000
13,200
Less: Uncollectible accounts
(22,400) 1,169,600
Dividends Payable
500,000
Inventories
Total Current Liabilities
753,200
Raw Materials (12,000 pounds)
30,000
Finished Goods (4,000 units)
140,000
170,000
Total Current Assets
1,357,600
Stockholder's Equity
Common Stock (100,000 shares)
500,000
Non-current Assets
Retained Earnings
360,400
Property, plant, and equipment
320,000
Total Stockholder's Equity
860,400
Less: Accumulated depreciation
(64,000)
256,000
Total Assets
1,613,600
Total Liabilities and SHE
1,613,600
N1 2020 3rd quarter sales P2,500,000
P
200,000
2020 4th quarter sales P3,100,000
992,000
P 1,192,000
N2 2020 3rd quarter purchases P300,000
P
75,000
2020 4th quarter purchases P330,000
165,000
240,000
Raw Materials Purchases Budget
For 2021
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Year
Units Required for Production
Direct Material per Unit (Ibs.)
40,000
44,000
48,400
53,240
185,640
3
3
3
Total Materials Needed
120,000
132,000
145,200
159,720
,920
Add: Desired Ending Inventory
13,200
14,520
15,972
15,000
15,000
Total Units Required
133,200
146,520
161,172
174,720
571,920
15,972
158,748
Less: Beginning Inventory
12,000
13,200
14,520
12,000
Units to be Purchased
121,200
133,320
146,652
559,920
Unit Price
2.50
2.50
2.50
2.50
2.50
Total Purchases
303,000.00
333,300.00
366,630.00
396,870.00
1,399,800.00
Undiscounted Current Quarter
151,500.00
166,650.00
183,315.00
198,435.00
Discount
1st Quarter Purchases
143,925.00
75,750.00
75,750.00
295,425.00
7,575.00
2nd Quarter Purchases
158,317.50
83,325.00
83,325.00
324,967.50
8,332.50
3rd Quarter Purchases
174,149.25
91,657.50
265,806.75
9,165.75
4th Quarter Purchases
Total
188,513.25
188,513.25
9,921.75
143,925.00
234,067.50
333,224.25
363,495.75
1,074,712.50
Transcribed Image Text:1. Finished product requires 3 pounds of direct materials at P2.50 per pound. Finished good ending inventory is
equal to 10% of the next quarter sales while raw materials ending inventory is equal to 10% of the next quarter
production needs of materials. First quarter of 2022 sales is expected to be at 50,000 units while raw materials
ending is at 13,500 pounds. (Units are rounded to the nearest ones.)
2. Each quarter's purchase are paid 50% in that quarter with 5% purchase discount, 25% in the following quarter
and the remainder in the second quarter following the purchase.
3. Each finished goods requires 5 direct labor hours with an hourly rate of P4.00 payable on the end of each
month.
4. For Factory overhead budget, use the following cost formula:
Indirect labor
PO.02 per direct labor worked (same payment scheme with direct labor)
P2 per unit produced
P48,000 annually, paid at the beginning of the year
Indirect material
Insurance
P6,500 per month
P500 per quarter plus PO.50 per unit produced
Factory rent
Utilities
Maintenance
P300 per quarter plus PO.30 per unit produced
10% of the PPE cost, annually
Depreciation
All overhead costs involve cash outlays are paid in the period which they are incurred, insurance cost. Worthy to
note, the company assumes that all indirect materials are used and paid in the month it was purchased.
5. Selling and administrative expenses
Advertising
P65,000 annually, paid at the beginning of the year
Commission
5% of total sales, paid quarterly
Admin salaries
P100,000 per quarter (same payment scheme with direct labor)
Office rent
P5,000 per month
6. Income tax is 30%, paid on the first quarter of the following year.
7. For cash budget, assume the following:
a. The company desires to maintain P15,000 minimum cash balance
b. Dividend is declared every end of the 4th quarter of the year P15 per issued and outstanding share and paid
every 2nd quarter of the following year
c. At the end of the 2nd quarter, the company plans to purchase P100,000 worth of equipment.
d. Any excess cash at the end of the 1st quarter of the year is used to buy long term investments P10,000
increments. 3% interest rate is credited to the company's bank account at the quarter's end based on
original cost of investment
e. In case of deficit, the company borrow from the bank P10,000 increments, payable in one year, 10% interest
rate is automatically debited to the companys bank account at the end of every quarter.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
