III. YouTech Corporation is a manufacturer of plastic flower pots. The company started operations on September 1, 2005. After operating for one year, the company came up with the balance sheet below. YouTech Corporation Balance Sheet As of August 31, 2006 Assets Liabilities Current Assets Accounts Payable Php 340,000 Cash Php 300.000 Income Tax Payable 60,000 Accounts Receivable 2,000,000 Bank Notes Payable 900,000 (-) Allow. For Uncoll. (33,000) Raw Materials Inv. 200,000 Total Liabilities Php 1,300,000 Work-in-Process 340,000 Finished Goods Inv. 280,000 Total Current Assets Php 3,087,000 Owners' Equity Fixed Assets Capital Stock Php 2,567,000 Mach. & Equipment 1,072,000 Retained Earnings 252,000 (-) Accumulated Dep'n. (40,000 Total Owners' Equity Php 2,819,000 Net Fixed Assets Php 1,032,000 Total Assets Php 4,119,000 Total Liabilities and Php 4,119,000 Owners' Equity The following are transactions for the 2nd year of operation: 1. Purchased Php 840,000 of Raw Materials on account. 2. Direct labor amounted to Php 300,000, with 1/3 unpaid on year end. 3. Utilities totaled to Php 100,000; 80% paid in cash, 60% charged for the factory 4. YouTech paid in cash other salaries worth Php 300,000, 60% for the production supervisors and the rest for the office personnel 5. Payments worth Php 600,000 were made to RM suppliers 6. Purchase returns amounted to Php 90,000, deductible from accounts payable. 7. Purchase Discounts availed of at Php 16,800, deductible from A/P 8. Freight-in, Php 20,000 paid in cash. 9. Depreciation - Php 30,000, 2/3 of which was charged to the factory 10. Other manufacturing overhead was paid in cash for Php 140,000 11. Gross sales for the 2nd year was Php 4,000,000, 2% of which is set as an allowance for doubtful accounts 12. Ending Balances: RM Inventory Php 233,200 WIP Inventory 485,000 FG Inventory 170,000 Required: a. Journalize and post the second year transactions. b. Prepare the Cost of Goods Manufactured and Sold Statement for the second year of operation. Please revise the following from the details of the Youtech Corporation for 2007 Sales increase 25% Purchases Increase 35% Direct Labor Increase 10% Total FOH increase 35% What will happen to Gross Margin after these changes on 2007? What is the GM % and how does this compare to the original GM% for 2007