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TEST III: PROBLEM SOLVING 15 points A. The following data are available for the NEW TRENDING Corporation for years 2019 and 2018 . New Trending

TEST III: PROBLEM SOLVING 15 points

A.

The following data are available for the NEW TRENDING Corporation for years 2019 and 2018.

New Trending Corporation

INCOME STATEMENT

For the year ended December 31, 2018

Net Sales P 1,000,000

Cost of Goods Sold:

Inventory, December 31, 2017 P 250,000

Purchases 720,000

Total Goods available P 970,000

Inventory, December 31, 2018 220,000 750,000

Gross Margin on Sales P 250,000

Selling and administrative (including

Depreciation of P20,000) 115,000

Net Income Before Tax P 135,000

Provision for Income Tax 45,000

Net Income for the Year P 90,000

New Trending Corporation

RETAINED EARNINGS STATEMENT

For the year ended December 31, 2018

Retained Earnings, December 31, 2017 P 130,000

Add: Net Income for the Year 90,000

Total P 220,000

Less: Dividends Paid 30,000

Retained Earnings, December 31, 2018 P 190,000

New Trending Corporation

BALANCE SHEETS

December 31, 2017 and 2018

ASSETS 2017 2018

Current Assets

Cash P 75,000P 85,000

Marketable Securities 25,000 25,000

Trade Receivables, net 185,000 245,000

Inventory, at cost 250,000 220,000

Prepaid Expenses 15,000 10,000

Total Current Assets P 550,000P 585,000

Non-current Assets

Equipment, net P 340,000P 320,000

Other Assets 15,000 15,000

Total Non-current Assets P 355,000P 335,000

TOTAL ASSETS P 905,000P 920,000

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Trade Payables P 185,000P 165,000

Accrued Expenses 20,000 25,000

Other Current Liabilities 10,000 10,000

Total Current Liabilities P 215,000P 200,000

Non-current Liabilities

Mortgage Payable P 120,000P 120,000

TOTAL LIABILITIES P 335,000P 320,000

Stockholders' equity9

Capital Stock, P100 par P 300,000P 300,000

Additional Paid-in Capital 30,000 30,000

Retained Earnings-Appropriated 80,000 80,000

Retained Earnings -Unappropriated 160,000 190,000

Total Stockholders' Equity P 570,000P 600,000

TOTAL LIABILTIES AND STOCKHOLDERS' EQUITYP 905,000P 920,000

NOTE: Use 360 days in the computation of Receivable and Inventory days, round off your answers to two (2) decimal places.

REQUIREMENTS: COMPUTE FOR THE FOLLOWING RATIOS AND MEASUREMENTS FOR 2018

  1. Amount of Working Capital
  2. Current Ratio
  3. Acid Test (Quick) Ratio
  4. Cash Flow from Operations to Current Liabilities
  5. Accounts Receivables Turnover
  6. Days' Sales in Receivable
  7. Inventory Turnover
  8. Inventory Days' Sales
  9. Gross Profit Ratio
  10. Earnings Per Share (EPS)
  11. Book Value Per Share
  12. Net Profit ratio
  13. Rate of Return on Equity
  14. Cash from Operations to Total Liabilities
  15. Ratio of Total Stockholders' Equity to Total Liabilities

B. (2 points each) 10 points

The following information pertains to Gem Company's manufacturing operations:

Inventories March 1 March 31

Direct materials P 36,000 P 30,000

Work in process 18,000 12,000

Finished goods 54,000 72,000

Additional information for the month of March:

Direct materials purchased P 84,000

Direct labor cost 60,000

Factory overhead 80,000

REQUIRED:

  1. Compute for the prime cost for March
  2. Compute for the conversion cost for March
  3. Compute for the total manufacturing costs for March
  4. Compute for the cost of goods manufactured for March
  5. Compute for the cost of goods sold for March

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