A.

Adjusting Entries

Description Debit Credit

1. Inventory, End Php 67,200
Income Summary Php 67,200

2. Doubtful Accounts Expense 15,638

Allowance for Doubtful Accounts 15,638

3. Sales Salaries and Commission 816

Accrued Commission 816

4. Freight In 1,500
Accounts Payable 1,500

5. Advertising Expense 4,200

Prepaid Expense 4,200

6. Freight Out 18,400

Sales 18,400

7. Depreciation Expense-Equipment 1,300

Accumulated Depreciation-Equipment 1,300

8. Other Expenses- Loss from flood 145,200

Extraordinary Loss 145,200
B. Statement of Comprehensive Income (Function of Expense Method)

Flawless, Inc.
Stetementof Comprehesive Income
For the year ended December 31, 2014

Net Sales Php 984,640

Less: Cost of Goods Sold 429,650

Gross Profit Php 554,990

Add: Other Income 52,700
Income before Operating Expense, Interest and Income Tax Tax Php 607,690

Operating Expenses
Selling Expenses 149,316
General and Administrative Expenses 127,820
Other Expenses (extraordinary loss) 145,200 387,400
Income before Interest and Income Tax Php 176,954
Interest Expense 9,040
Income after interest before Tax Php 167,914
Income Tax Expense (30%*Php 167,914) 50,374
Net Income Php 117,540
Net Sales
Sales 990,400
Add: adjustment 18,400
Gross Sales 1,008,800
Less: Sales Return and Allowances 22,400
Sales Discount 1,760
Net Sales 984,640

Cost of Goods Sold

Inventory, beg. 179,400
Add: Purchases 346,000
Freight In 11,050
Adjustment to freight in 1,500
Cost of goods available for sale 537,950
Less: adjustment to inventory 67,200
Inventory, end 41,100

Cost of Goods Sold 429,650

Other Income
Interest Revenue Php 1,400
Dividend Revenue 14,300
Php 15,700

Selling Expense
Sales Salaries and Commission Php 70,000
  Depreciation Expense-Delivery 12,200
Miscellaneous Selling Expense 4,400
Advertising Expense 32,180
Php 114,380 149,316

General and Administrative Expense

Legal Services Php 4,450
Insurance and Licenses 17,000
Salesmen’s Travelling Expense 7,120
Depreciation Expense- Office 9,600
Utilities Expense 12,800
Telephone and Postage 2,950
Officer’s Salaries 73,200
Php 127,820 136,220
C. Statement of Comprehensive Income (Nature of Expense Method)

Flawless, Inc.
Stetementof Comprehesive Income
For the year ended December 31, 2014

Sales Php 990,400

Less: Expenses
Inventory, beg. 179,400
Purchases 346,000
Freight In 12,550
Inventory, end 41,100
Interest Expense 9,040
Utilities Expense 12,800
Supplies Inventory 4,360
Dividends 66,000
Miscellaneous Expense 4,400
Officer’s Salaries 73,200 748,850
Net Income Php 241,550