SCI Handout 1

PART 1

1) CMB Industries provided the following balances on December 31, 2019

Accounts payable Php 1,400,000
Accrued taxes 55,000
Ordinary share capital 7,700,000
Dividends – ordinary share 4,400,000
Dividends – preference share 1,600,000
Mortgage payable (Php 500,000 due in 6 months) 6,000,000
Notes payable, due on January 14, 2021 2,300,000
Preference share capital 3,250,000
Premium on notes payable 125,000
Income summary – credit balance 9,090,000
Retained earnings – January 1 8,080,000
Unamortized issue cost on note payable 65,000
Unearned rent income 35,000
What is the amount of retained earnings for the year ended?
A. Php 2,080,000
B. Php 11,170,000
C. Php 17,170,000
D. Php 22,120,000

2) LMR Enterprises provided the following data for the current year:
Net income Php 2,014,000
Unrealized gain on derivative contract 507,000
Foreign currency translation adjustment – debit 51,500
Revaluation surplus 201,400
What is the comprehensive income for the current year?
A. Php 2,721,900
B. Php 2,670,900
C. Php 2,469,500
D. Php 2,521,000

3) Promise Conglomerates incurred the following during the current year:

• Php 846,895 from condemnation of asset
• Php 689,870 from employee’s major strikes
• Php 318,545 from abandonment of equipment used in business
In the income statement, what is the total amount of infrequent losses that should be reported as
ordinary?
A. Php 0
B. Php 1,165,440
C. Php 1,536,765
D. Php 1,855,310

4) EXODUS Trading accounts for noncurrent assets using cost model. On September 30, 2019, the entity
classified a noncurrent asset as held for sale. At the date, the asset’s carrying amount was Php
1,457,965, its fair value was estimated at Php 957,365, and the cost of disposal at Php 68,500. On
November 20, 2019, the asset was sold for net proceeds of Php 875,000. What amount should be
included as loss on disposal in the statement of comprehensive income for the year ended, December
31, 2019?
A. Php 13,865
B. Php 82,365
C. Php 514,465
D. Php 582,965
SCI Handout 1

5) EXO Entertainment has two divisions, EXO-K and EXO-M, and both qualifies as business component.
In 2019, the entity decided to dispose of the assets and liabilities of Division EXO-M and it’s probable
that the disposal will be complete next year. The revenue and expenses of EXO Entertainment for 2018
and 2019 are as follows:
2018 2019
EXO-K
Sales Php 4,600,000 Php 5,000,000
Total nontax expenses 4,100,000 4,400,000

EXO-M
Sales 5,100,000 3,500,000
Total nontax expenses 4,500,000 3,900,000
During the latter part of 2019, EXO disposed of a portion of Division M and recognized a pretax loss
of Php 2, 00,000 on disposal. The income tax rate is 30%. What amount should be reported as a loss
from discontinued operations in 2019?
A. Php 1,400,000
B. Php 1,680,000
C. Php 2,000,000
D. Php 2,400,000

PART 2

Use the following information for the next two questions:

The following items were presented for the purpose of determining
comprehensive income.
Profit for the year 2,000
Increase in revaluation surplus 1,000
Remeasurements of the net defined benefit liability (asset) – loss (200)
Net change in translation of foreign operation (400)
Dividends declared (100)
Stock rights 300

1. How much is the other comprehensive income?

a. 400
b. 600
c. 800
d. 2,000

2. How much is the total comprehensive income?

a. 1,800
b. 2,200
c. 2,400
d. 2,800

Use the following information for the next two questions:

The records of Afternoon Sun Co. show the following information:

Interest expense ₱24,000

Cost of inventories sold 600,000
SCI Handout 1

Insurance expense 100,000

Advertising expense 20,000
Freight-out 10,000
Freight-in 4,000
Loss on sale of equipment 2,000
Legal and other professional fees 12,000
Rent expense (one-half occupied by sales department) 8,000
Sales commission expense 14,000
Doubtful accounts expense 16,000

3. How much is the total distribution (selling) costs?

a. 48,000
b. 56,000
c. 64,000
d. 108,000

4. How much is the total administrative expenses?

a. 24,000
b. 132,000
c. 226,000
d. 668,000

5. The records of SOIREE EVENING PARTY Co. showed the following information:

Increase in accounts receivable 100,000

Collections on accounts 800,000
Cash sales 120,000
Increase in inventory 40,000
Freight-in 14,000
Freight-out 13,000
Decrease in accounts payable 60,000
Disbursements for purchases 480,000
Purchase discounts 4,000

How much is the gross profit for the year?

a. 662,000
b. 656,000
c. 648,000
d. 626,000

6. The records of BRACKISH SALTY Co. showed the following information:

Accounts receivable, net, Jan. 1, 20x1 40,000

Accounts receivable, net, Dec. 31, 20x1 160,000
Accounts receivable turnover 4:1
Inventory, Jan. 1, 20x1 120,000
Inventory, Dec. 31, 20x1 60,000
Inventory turnover 3:1

How much is the gross profit for the year?

a. 120,000
b. 130,000
c. 132,000
d. 146,000
SCI Handout 1

7. The records of SURLY BAD TEMPERED Co. showed the following information:
Decrease in accounts payable 60,000
Disbursements for purchases 440,000
Increase in raw materials 100,000
Direct labor is 50% of raw materials used in production
Manufacturing overhead is 20% of prime costs
Increase in work-in-process inventory 40,000
Decrease in finished goods inventory 50,000

How much is the cost of goods sold?

a. 380,000 c. 514,000
b. 464,000 d. 546,000

8. PRENTICE A LEARNER Co. reported profit after tax of ₱210,000. PRENTICE’s income tax rate
is 30%. Operating expenses for the year is 15% of sales and 25% of cost of sales. Other
expenses were 10% of sales. How much is the total sales?
a. 1,800,000 c. 2,200,000
b. 2,000,000 d. 2,240,000

9. The records of HACK TO CHOP Co. on December 31, 20x1 showed the following information:

2,000,00
Sales 0
Sales discounts 20,000
Cost of sales 800,000
Distribution costs 96,000
Administrative costs 240,000
Casualty loss on typhoon 40,000
Dividends received from investments in FVPL 24,000
Dividends received from investment in associate 48,000
Share in the profit of an associate 72,000
Dividends declared and paid 28,000
Interest expense 44,000
Unrealized gain on investments in FVPL 30,000
Unrealized gain on investments in FVOCI 38,000
Income tax expense 300,000
Loss on revaluation 26,000
Remeasurements of the net defined benefit liability (asset) –
gain 22,000
Correction of understatement in depreciation in prior year 32,000
Translation adjustment of foreign operation – loss 8,000

How much is the profit for the year?

a. 886,000 c. 612,000
b. 586,000 d. 626,000

10. WASHY PALE Co. has the following information on December 31, 20x1:

-Cost of sales is ₱260,000.

- Operating expenses are 13% of sales and 20% of cost of sales. - Interest expense is
5% of sales.
-Income tax rate is 30%. There were no temporary differences during the year.
How much is the profit for the year?
a. 65,000 c. 38,600
b. 140,000 d. 47,600