FINANCIAL ACCOUNTING

PROBLEM SET (Review)

(1.) Truman Unlimited (Truman), distributor of heavy equipment and machinery, was organized on April 1, 1992. After one year of operations, the balance sheet for Truman is shown below:

TRUMAN UNLIMITED

Balance Sheet

As of 1 April 1993

Current Assets:		Current Liabilities:
Cash	P 600,000	Notes Payable	P 5,000
Inventory	300,000	Bank Loans Payable	200,000
Total	P 900,000	Total	P 205,000
Fixed Assets:		Owners Equity:
Office Equipment	P 250,000	Paid-In Capital	P 945,000
Less: Accd Depn.	5,000	Retained Earnings	(5,000)
Net Office Eqpt.	P 245,000	Total Owners Equity	P 940,000
TOTAL ASSETS	P1,145,000	TOTAL LIAB. & OE	P1,145,000

*Monthly depreciation charges of P416.67 a month.

Transactions for April and May 1993 are listed below:

1. Makes a cash disbursement for the rental of their new stockroom and office. Monthly rental is at P15,000 per month. Truman pays six months in advance.
2. Purchased imported heavy equipment and generators (all intended for sale). The list price on the imports were P25,000 but Truman was able to negotiate for a discount of 2,000. In addition on this, Truman paid P3,000 in taxes to have the imported goods cleared at customs. Of the total amount of the goods that were entered in the accounting records, 50% were paid for in cash, and the rest were on credit.
3. Goods worth P270,000 were removed from inventory, delivered to customers, and were sold for P600,000. Of this amount, 75% were on credit while the rest were on cash basis. It was estimated that 10% of those sales on credit would never be collected.
4. Issues a check for P13,000 to pay off part of the principal of the Bank Loan obtained.
5. A customer pays Truman P500 for a machine part worth P200. The customer requests that the part be delivered after 100 days.
6. Cash Disbursements: Utilities, P30,000; Salaries, P5,000; Interest, P9,000,
7. Takes P135,000 from the business to give as donation to a home for street children.
8. Income tax rates are as follows: 35% for the first 25,000; 45% for any amount above 25,000. Assume that Truman pays all taxes on January 1994.

Required: (1) Journalize all relevant transactions.

(2) Prepare the income statement for the two months and the balance sheet as of May, 1993, in proper format.

(2.) The cost department of Lancer Corporation made the following data and costs available for the year 1997:

	January 1	December 31
Raw materials	P 34,200	P 49,300
Work-in-process	81,500	42,350
Finished goods	48,600	?
Depreciation factory equipment		21,350
Raw materials purchased		364,000
Direct labor		162,500
Indirect labor		83,400
Freight-in		8,600
Miscellaneous factory overhead		47,900

Finished goods inventory Jan. 1: 300 units; Dec. 31: 420 units, all from current years of production. Sold during 1997: 3,880 units at PhP 220 per unit. The company uses FIFO method in costing its inventory.

Required: (1) The unit cost of the finished goods inventory on December 31.

(2) The cost of goods manufactured and sold statement.