Problem 1: On December 31, 2015 KTV Co.

, with outstanding share capital of P60,000 had the following assets and liabilities: Problem 1: On December 31, 2015 KTV Co., with outstanding share capital of P60,000 had the following assets and liabilities:
Cash P 10,000 Materials P 8,000 Cash P 10,000 Materials P 8,000
Accounts Receivable 20,000 Prepaid Expense 1,000 Accounts Receivable 20,000 Prepaid Expense 1,000
Finished Goods 12,000 Property, Plant and Equipment 60,000 Finished Goods 12,000 Property, Plant and Equipment 60,000
Work in Process 4,000 Current Liabilities 35,000 Work in Process 4,000 Current Liabilities 35,000
During 2016, the retained earnings account increased 50% as a result of the year’s business. No dividends were paid during During 2016, the retained earnings account increased 50% as a result of the year’s business. No dividends were paid during
the year. Balances of accounts receivable, prepaid expenses, current liabilities, and share capital were the same on December the year. Balances of accounts receivable, prepaid expenses, current liabilities, and share capital were the same on December
31, 2016, as they had been on December 31, 2015.Inventories were reduced by exactly 50% except for finished goods 31, 2016, as they had been on December 31, 2015.Inventories were reduced by exactly 50% except for finished goods
inventory, which was reduced by 33 1/3%. Plant assets(net) were reduced by depreciation of P8,000, charged ¾ to factory inventory, which was reduced by 33 1/3%. Plant assets(net) were reduced by depreciation of P8,000, charged ¾ to factory
overhead and ¼ to administrative expense. Sales of P120,000 were made on account, costing P76,000. Direct labor cost was overhead and ¼ to administrative expense. Sales of P120,000 were made on account, costing P76,000. Direct labor cost was
P18,000, Factory overhead was applied at a rate of 100% of direct labor costs, leaving P4,000 underapplied that was closed P18,000, Factory overhead was applied at a rate of 100% of direct labor costs, leaving P4,000 underapplied that was closed
to cost of goods sold account. Total marketing and administrative expenses amounted to 10% and 15% of gross sales to cost of goods sold account. Total marketing and administrative expenses amounted to 10% and 15% of gross sales
respectively. respectively.
Required: Prepare the statement of financial position and income statement with note showing details of cost of goods sold. Required: Prepare the statement of financial position and income statement with note showing details of cost of goods sold.
Problem 2: Mare’s Co., uses job order cost accumulation and applies overhead based on direct labor hours. Any under/over Problem 2: Mare’s Co., uses job order cost accumulation and applies overhead based on direct labor hours. Any under/over
applied overhead is adjusted directly to Cost of Goods Sold at the end of each month. On April 1, Job cost sheets indicated applied overhead is adjusted directly to Cost of Goods Sold at the end of each month. On April 1, Job cost sheets indicated
the following: the following:
Job 201 Job 202 Job 203 Job 204 Job 201 Job 202 Job 203 Job 204
Direct Materials P 3,590 P 2,000 P 1,480 P 2,000 Direct Materials P 3,590 P 2,000 P 1,480 P 2,000
Direct labor 2,700 1,500 1,000 1,200 Direct labor 2,700 1,500 1,000 1,200
Applied Overhead 2,160 1,200 800 960 Applied Overhead 2,160 1,200 800 960
Total Cost P 8,450 P 4,700 P 3,280 P 4,150 Total Cost P 8,450 P 4,700 P 3,280 P 4,150
Job Status Finished In Process In Process In Process Job Status Finished In Process In Process In Process
On April 30, Finished goods contained only Jobs 204 and 207, which had the following total costs: On April 30, Finished goods contained only Jobs 204 and 207, which had the following total costs:
Direct Materials Direct labor Applied Overhead Total Cost Direct Materials Direct labor Applied Overhead Total Cost
Job 204 P 2,970 P 2,200 P 1,760 P 6,930 Job 204 P 2,970 P 2,200 P 1,760 P 6,930
Job 207 2,450 1,900 1,520 5,870 Job 207 2,450 1,900 1,520 5,870
Besides working on Jobs 204 and 207 in April, Mare’s, continued work on jobs 202 and 203 and started work on jobs 205 and Besides working on Jobs 204 and 207 in April, Mare’s, continued work on jobs 202 and 203 and started work on jobs 205 and
206. A summary of direct materials used and direct labor hours worked on Jobs 202, 203, 205 and 206 during April showed 206. A summary of direct materials used and direct labor hours worked on Jobs 202, 203, 205 and 206 during April showed
the following: the following:
Job 202 Job 203 Job 205 Job 206 Job 202 Job 203 Job 205 Job 206
Direct Materials P 1,250 P 555 P 2,500 P 1,980 Direct Materials P 1,250 P 555 P 2,500 P 1,980
Direct labor hours 100 75 105 50 Direct labor hours 100 75 105 50
Other information: Other information:
a) On April 30, the only jobs still in process were 203 and 206. a) On April 30, the only jobs still in process were 203 and 206.
b) All workers are paid P20 per hour. Wages rate have been stable throughout the year. b) All workers are paid P20 per hour. Wages rate have been stable throughout the year.
c) Mare’s maintain only one raw materials account (Material Control) from which it issues both direct and indirect c) Mare’s maintain only one raw materials account (Material Control) from which it issues both direct and indirect
materials. The balance in this account was P2,750 on April 1. materials. The balance in this account was P2,750 on April 1.
d) All Sales are billed on account at 50% above cost. d) All Sales are billed on account at 50% above cost.
e) Other items in April were: Depreciation factory equipment – P1,375; Raw materials purchased – P11,500; Indirect e) Other items in April were: Depreciation factory equipment – P1,375; Raw materials purchased – P11,500; Indirect
labor – P2,500; Factory rent – P2,700; and Indirect materials used – P2,790. labor – P2,500; Factory rent – P2,700; and Indirect materials used – P2,790.
Required: Required:
1) Determine the balance of material control account and work in process account as of April 30. 1) Determine the balance of material control account and work in process account as of April 30.
2) Prepare the journal entries April. 2) Prepare the journal entries April.
3) Calculate the cost of goods manufactured (Cost of goods manufactured statement is not required) 3) Calculate the cost of goods manufactured (Cost of goods manufactured statement is not required)
4) Calculate the under or over applied overhead for April. 4) Calculate the under or over applied overhead for April.
5) Calculate the gross profit for April. 5) Calculate the gross profit for April.