Problem 2 The balance sheet of Mahal Manufacturing Co. showed the following on June 30, 2011. Cash Accounts receivable Finished goods inventory Work in process inventory Raw materials inventory Factory supplies inventory Office supplies inventory Machinery Accumulated depreciation - machine Office Furniture & Equipment Accumulated depreciation - Office furniture & equipment Delivery equipment Accumulated depreciation - delivery equipment Accounts payable Notes payable Capital stock Additional paid in capital Retained earnings P150,000 15,750 6,000 40,000 30,000 1,500 650 225,000 19,500 79,600 10,200 80,000 17,000 8.500 74.800 250,000 155,000 93,500 The following transactions took place in July: 1) Materials purchased on count, P25,000 cluding P2,000 freight 2) Factory supplies purchased for cash, P6,500. 3) Payroll: A total of P72,000 out of which P10,000 was for indirect labor, P8,000 for sales salaries and P15,000 for administrative salaries less deductions of 5% for taxes, 2% for SSS, 1.5% for Phil Health and 1% for HDMF. 4) Other overhead paid were: machine repairs, P2,000; rent, P8,000; factory insurance, P1,500; Machine oil and lubrication, P4,500; delivery truck repairs, P3,750. 5) Common overhead paid: Rent, P8,000: Light and power, P6,000. Allocation of indirect costs is P50% for manufacturing and equally for distribution and administrative. 6) Sales on account, P165,000 and for cash P75,000. Term for all customers is 2/10, n/30. 7) Payment of liabilities, net of P500 discounts, P21,500. 8) Collections of accounts amounting to P120,000 of which P8,000 were collected within the discount period. Additional information at the end of the month showed the following: a) Depreciation amounted to P4,250; machinery, P2,500; Office furniture and equipment, P750; delivery trucks, P1,000. b) Expired factory insurance, P300 c) Accrued factory expenses, P1,750. d) Physical count of inventories showed: Work in process 20,500 Finished goods 10,800 Materials 14,000 Factory supplies 5,000 Office supplies 200 Requirement: a. Prepare a statement of cost of goods manufactured b. Income statement with line items c. Statement of financial position with line items