P1,218,000
276,000
P 970,000
202,000
P600,000
250,000
P400,000
125,000
P942,000
768,000
P174,000
250,000
(100,000)
P324,000
P850,000
525,000
P325,000
120,000
P445,000
P430,000
(15,000)
P415,000
200,000
300,000
P915,000
(20,000)
P895,000
35,000
P930,000
(MGM COMPANY)
Cost of goods manufactured
Finished goods, beginning
Finished goods, end
Cost of goods sold
Gross profit
Sales
P2,720,000
380,000
(418,000)
P2,682,000
962,000
P3,644,000
18
(MANDALAY COMPANY)
Let x = cost of sales
.30x = .18 sales
x = .18/.30 sales
x = .60 sales
Therefore, 100% - 60% - 18% - 12% = 10%
Sales = 280,000/10%; Sales = 2,800,000
Cost of sales = 60% x 2,800,000 = 1,680,000
Income tax is ignored.
4-6.
(EXCALIBUR PRODUCTS)
Excalibur Products
Income Statement
For the Year Ended December 31, 2012
Sales
Cost of sales
Beginning inventory
Purchases
Ending inventory
Gross profit
Selling expenses
General and administrative expenses
Profit before income tax
Income tax
Profit
P895,000
P126,000
466,250
(189,500)
(402,750)
P492,250
(161,100)
(128,880)
P202,270
(60,681)
P141,589
(11)
P3,359,000
105,000
P3.464.000
(12)
(13)
1,762,000
(105,000)
77,000
170,000
502,000
241,000
75,000
27,000
85,000
170,000
3,004,000
(14)
(15)
(16)
(17)
19
Total
P460,000
( 37,000)
P423,000
126,900
P296,100
(245,000)
P 51,100
P 56,000
28,000
P 84,000
P135,100
Notes to Financial Statements (after presenting notes for basis of presentation and
summary of significant accounting policies)
Note11 Net sales revenue
Sales
Less sales discounts
Sales returns and allowances
Net sales revenue
P3,529,000
P 49,000
121,000
170,000
P3,359,000
P1,730,000
135,000
P1,865,000
P41,000
62,000
103,000
P1,762,000
P446,000
341,000
P105,000
P182,000
320,000
P502,000
P145,000
96,000
P241,000
P56,000
19,000
P75,000
20
P 50,000
120,000
P170,000
P 900,000
(1,050,000)
P (150,000)
45,000
P (105,000)
(140,000)
P (245,000)
Note
(11)
(12)
Total
P3,359,000
1,657,000
P1,702,000
105,000
P 1,807,000
(12)
(13)
(14)
(18)
P581,000
596,000
170,000
P1,347,000
P460,000
( 37,000)
P423,000
126,900
P296,100
(245,000)
P 51,100
P 56,000
28,000
P 84,000
P135,100
Notes to Financial Statements (after presenting notes for basis of presentation and summary
of significant accounting policies)
21
P3,529,000
P 49,000
121,000
170,000
P3,359,000
P341,000
P1,730,000
135,000
P1,865,000
(41,000)
(62,000)
1,762,000
P2,103,000
446,000
P1,657,000
P182,000
135,000
77,000
170,000
96,000
P581,000
P27,000
19,000
85,000
320,000
145,000
P596,000
P 50,000
120,000
P170,000
22
P 900,000
(1,050,000)
P (150,000)
45,000
P (105,000)
(140,000)
P (245,000)
Retained
Earnings
P1,785,000
(126,000)
P1,659,000
51,100
(60,000)
P1,650,100
Total
P3,145,000
(126,000)
P3,019,000
140,000
135,100
(60,000)
P3,234,100
Reserves at January 1 included the share premium (P610,000) and unrealized gain on investments
carried at fair value through OCI (P50,000). The amounts may be reported in separate columns.
4-8.
(TRUMP COMPANY)
a.
Revenues
Selling and Administrative Expenses
Disposal costs
Operating Profit (Loss) before income tax
Income tax benefit
Operating Profit (loss)
P5,000,000
5,080,000
(75,000)
P(155,000)
46,500
P(108,500)
Fair value less cost to sell is P830,000 (980,000 150,000) which is greater than the
carrying amount of P800,000.
b.
Revenues
Selling and Administrative Expenses
Disposal costs
Operating Profit (Loss) before income tax
Income tax benefit
Operating Profit (loss)
Loss from measurement to NRV, net of income tax
benefit of P54,000
Discontinued Operations
P5,000,000
5,080,000
(75,000)
P(155,000)
46,500
P(108,500)
(126,000)
P(234,500)
Fair value less cost to sell is P620,000 which is P180,000 lower than the carrying amount
of P800,000, which is reported as loss from measurement to NRV.
23
Share
Capital
P2,000,000
Retained
Earnings
P1,500,000
Total
P3,500,000
P2,000,000
(56,000)
P1,444,000
(56,000)
P3,444,000
P2,000,000
514,000*
(200,000)
P1,758,000
514,000
(200,000)
P3,758,000
P2,000,000
750,000
(500,000)
P2,008,000
750,000
(500,000)
P4,008,000
4-10.
(TUSCANY COMPANY)
Tuscany Company
Comparative Income Statements
For the Years Ended December 31, 2012 and 2011
2012
P3,000,000
(1,420,000)
1,580,000
(350,000)
(260,000)
P970,000
(291,000)
P 679,000
Sales
Cost of goods sold
Gross profit
Selling expenses
General and administrative expenses
Profit before income tax
Income tax
Profit
Ending inventory, 2011, as reported
Cost of goods sold, as reported in 2011
Goods available for sale
Beginning inventory, as reported in 2011
Purchases in 2011
P 355,000
1,140,000
P1,495,000
250,000
P1,245,000
Purchases
P1,245,000
Inventory, beg (weighted average)
210,000
Inventory, end (weighted average)
(312,000)
Restated Cost of sales in 2011, weighted average P1,143,000
24
2011
P2,540,000
(1,143,000)
1,397,000
(210,000)
(220,000)
P967,000
(290,100)
P 676,900
Retained
Earnings
P 600,000
Total
January 1, 2011, balances as previously reported
P1,600,000
Cumulative effect of changing from FIFO to weighted
average method of inventory costing, net of income
tax of P12,000*
(28,000)
(28,000)
January 1, 2011 balances, as restated
P1,000,000
P572,000
P1,572,000
2011 Changes
Profit
676,900
676,900
Dividends
(400,000)
(400,000)
December 31, 2011 balances
P1,000,000
P848,900
P1,848,900
2012 Transactions
Profit
679,000
679,000
Balances, December 31, 2012
P1,000,000
P1,527,900
P2,527,900
* based on 30% income tax rate
Cumulative effect shown on the statement of changes in equity
Difference in beginning inventory of 2011 (250,000-210,000)
P40,000
Applicable tax (30% x 40,000)
12,000
Net adjustment (deduction) from retained earnings, January 1, 2011
P28,000
The cumulative effect, however, is taken up in the books during 2012, when the change was
decided upon by the management. The following 2012 entry: is made:
Retained earnings
30,100
Income tax payable
12,900
Inventory, beginning (or cost of sales)
43,000
Thus, the retained earnings at December 31, 2012 is P879,000 - 30,100 + 679,000 = P1,527,900.
4-11. (RIVIERA COMPANY)
Riviera Company
Comparative Statement of Comprehensive Income
For Year Ended December 31, 2012 and 2011
(In million pesos)
Revenue
Raw materials and consumables used
Employee benefit expense
Depreciation and amortization
Other expenses
Income from operations
Finance costs
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Unrealized gains (losses) on investments measured at fair
value through other comprehensive income, net of
applicable tax
Total comprehensive income
25
2012
P2,000
(850)
(100)
(40)
(2)
P1,008
(4)
P1,004
(301.2)
P702.8
2011
P1,800
(745)
(95)
(40)
(3)
P917
(5)
P912
(273.6)
P638.4
.56
P703.36
(.84)
P637.56
D
C
D
A
A
B
Problems
MC25 D
MC26
MC27
MC28
MC29
MC30
MC31
MC32
A
A
D
B
B
MC33
MC34
MC35
MC36
MC37
MC38
MC39
MC40
MC41
C
C
B
C
C
B
D
B
D
MC42
MC43
MC44
MC45
D
C
B
MC46
MC47
MC48
MC49
MC50
MC51
D
D
C
B
A
B
MC52
MC7
MC8
MC9
MC10
MC11
MC12
A
A
A
D
D
B
MC13
MC14
MC15
MC16
MC17
MC18
B
B
A
D
B
D
MC19
MC20
MC21
MC22
MC23
MC24
B
B
B
D
C
C
26