Reference no: EM132819111

For the year 2020, PAUBAYA CORPORATION provided the following information:

Loss on sale of equipment 50,000

Purchase discounts 100,000

Dividend revenue 150,000

Loss on sale of investment 50,000

Land 500,000

Merchandise inventories, January 1 500,000

Merchandise inventories, December 31 1,000,000

Allowance for doubtful accounts 50,000

Accounts receivable 800,000

Cash 400,000

Accumulated depreciation-office equipment 100,000

Depreciation expense - office equipment 25,000

Officer's salaries 500,000

Freight in 500,000

Sales discounts 10,000

Share capital 3,000,000

Share premium 300,000

Retained earnings unappropriated 1,250,000

Trademark 200,000

Secret processes and formulas 200,000

Bank loan payable - due June 30, 2022 500,000

Sales returns and allowances 140,000

Sales 7,850,000

Depreciation expense - machinery 100,000

Salesmen's commission 650,000

Mortgage note payable in quarterly installments of P100,000 2,000,000

Building *(office) 5,000,000

Accumulated depreciation - machinery 1,200,000

Office Equipment 400,000

Accumulated depreciation - building 2,000,000

Investment in associate 1,300,000

Depreciation expense - building 300,000

Freight out 175,000

Rental income 250,000

Purchases 5,250,000

Prepaid expenses 100,000

Notes payable 750,000

Accounts payable 350,000

Accrued expenses 60,000

Machinery *(store) 3,000,000

Purchases returns and allowances 250,000

Estimated liability for damages 140,000

Retained earnings appropriated for plant expansion 1,000,000

Retained earnings appropriated for contingencies 100,000

Income tax rate is 30 %.

Requirement:

Problem 1. Prepare in good form an income statement using the "functional method" with supporting notes.

Problem 2. Prepare in good form a properly classified statement of financial position.