Ma. Faith R.

Tan March 15, 2021

BSA-2A | Acctg 7

Exercise no. 4

YOUTH COMPANY
Income Statement
Year ended December 31, 2020

Note

Net sales (1) P 8 870 000

Cost of goods sold (2) ( 5 900 000)

Gross income P 2 970 000

Expenses:
Distribution costs (3) P 690 000
Administrative expenses (4) 580 000
Uninsured flood loss 340 000 ( 1 610 000)

Income before tax 1 360 000

Income tax expense ( 360 000)

Net income P 1000 000

Note 1 – Net Sales

Sales P 9 070 000

Sales Returns and Allowances ( 200 000)

Total net sales P 8 870 000

Note 2 – Cost of Goods Sold

Inventory, beginning P 1 500 000

Purchases 5 750 000
Purchase discount ( 100 000)
Transportation in 150 000
Goods available for sale 7 300 000
Inventory, ending ( 1 400 000)

Cost of goods sold P 5 900 000

Note 3 – Distribution costs

Store supplies P 80 000

Sales salaries 500 000
Depreciation-store equipment 110 000

Total distribution cost P 690 000

Note 4 – Administrative expenses

Officer’s Salaries P 400 000

Depreciation-building 120 000
Office supplies 60 000

Total Administrative expenses P 580 000