MARK FLORENCE A.

IGLESIAS

Management Accounting & Controllership

Learning Activity No. 3
Analysis of Financial Statements

The following ratios and other data pertain to the financial statements of Maranan
Company for the year ended December 31, 2018.

Current Ratio 1.80:1

Acid test Ratio 1.50:1
Working Capital P 320,000
Inventory Turnover (based on ending inventory 8 times
Gross Profit Percentage 40%
Average age of outstanding A/R (based on 360 days) 90 days
Plant assets to stockholders’ equity 0.80 to 1
Earnings per share P 2.00
Capital Stock, shares outstanding 40,000
Net earnings for the year as a % of capital stock 20%
10% Bonds payable at the beginning and end of 2018 P200,000

The company has no prepaid expenses, deferred or intangible assets.

Required: Reconstruct the following financial statements:

1. Income Statement for 2018

2. Balance Sheet as of December 31, 2018

Direct Costing:

2018
Sales
Variable expense:
Variable cost of goods sold
Variable selling and administrative expense
Total variable expense
Contribution Margin
Fixed expenses:
 MARK FLORENCE A. IGLESIAS

Fixed manufacturing overhead

Fixed selling and administrative expense
Total fixed expenses

Absorption Costing:

2018
Sales
Cost of Goods Sold
Gross Margin
Selling and Administrative expenses
Net operating income (loss)