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03 - HO - Statement of Comprehensive Income
03 - HO - Statement of Comprehensive Income
Case 1. An entity reported the following data for the current year:
The office space is used equally by the sales and accounting departments.
Requirements:
1. What amount should be classified as general and administrative expenses?
2. What amount should be reported as selling expenses?
Case 2. An entity provided the following information for the current year:
Increase in raw materials inventory 150,000
Decrease in goods in process inventory 200,000
Decrease in finished goods inventory 350,000
Raw materials purchased 4,300,000
Direct labor payroll 2,000,000
Factory overhead 3,000,000
Freight out 450,000
Freight in 250,000
Requirement:
1. What is the cost of goods sold for the current year?
Case 3. The following selected account balances were taken from the records of BP corporation for the year 2020:
Sales P7,800,000
Sales discount 240,000
Sales returns 60,000
Purchases 5,200,000
Purchase discounts 140,000
Purchase returns 480,000
Freight-in 50,000
Rent revenue 300,000
Dividend revenue 200,000
Interest Expense 125,000
Income from associates 225,000
Loss from earthquakes 85,000
Inventory, January 1 1,000,000
Inventory, December 31 1,400,000
Freight out 160,000
Salesmen’s commission 640,000
Depreciation – store 140,000
Officers’ salaries 500,000
Depreciation – Office 300,000
Income tax expense 640,000
Loss on sale of equipment 55,000
Loss in sale of FA @ FVTPL 75,000
Loss on expropriation of land 90,000
Increase in revaluation surplus, net of tax 126,000
Holding losses on FA @FVOC, net of tax benefit (70,000)
Requirements:
1. Prepare a statement of comprehensive income for the year ended December 31, 2020 using nature of expense method.
2. Prepare a statement of comprehensive income for the year ended December 31, 2020 using function of expense method.
DNF,CPA | 1
Far Eastern University – Manila ACT111 HO No. 3
Case 4. For the year ended December 31, 2020. JNT Company recorded sales revenue of P3,600,000. The following
items of income and expenses were recorded for the financial year:
Unallocated Costs:
Directors salaries 200,000
Depreciation – head office 120,000
Write-down of inventories 160,000
Impairment loss 100,000
Allowance for bad debts 80,000
Other operating income 200,000
Management has concluded that a reasonable basis to allocate common costs to the cost of sales, distribution,
administration, and R&D functions respectively are in the following ratios:
Requirements:
1. Prepare a statement of comprehensive income for the year ended December 31, 2020 using nature of expense method.
2. Prepare a statement of comprehensive income for the year ended December 31, 2020 using function of expense method.
Case 5. David Corp reports operating expenses in two categories: (1) Selling and (2) general and administrative. The
adjusted trial balance at December 31, 2020, included the following expense and loss accounts:
Requirements:
1. How much is David’s total selling expense?
2. How much is David’s total General & Administrative expense?
Case 6. Logan Corp’s trial balance of income statement accounts for the year ended December 31, 2020 included the
following:
Debit Credit
Sales revenue 140,000
Cost of sales 60,000
Administrative expenses 25,000
Loss on sales of equipment 9,000
Commissions to salespersons 8,000
Interest revenue 5,000
Freight-out 3,000
Loss on disposition of wholesale division 17,000
Bad debt expense 3,000
Total 125,00 145,000
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Far Eastern University – Manila ACT111 HO No. 3
Other information:
Logan’s income tax rate is 30%. Merchandise purchase are:
January 1, 2020 80,000
December 31, 2020 70,000
Requirements:
1. On the Income statement for 2018, merchandise purchase are?
2. On the Income statement for 2018, income from continuing operations are?
Case 7. Changi company sells one of its products for P500 per unit on credit. To encourage early settlement the company
awards its customers a 10% early settlement discount provided that the customer settles within 30 days of buying the
goods. Normal credit terms are 60 days. Customer A pays P40,500. Within 30 days of the date of purchase to settle the
amount owing for 90 units brought to the entity. If the company uses the net method of recording receivables and sales,
what amount of revenue from sales should the company disclosed in the statement of comprehensive income?
Case 8. Joy Company has a contract with a customer of selling goods and rendering the necessary services. The
transaction price is P1,000,000. The stand-alone selling prices of the goods and service are P900,000 and P200,000
respectively. A discount of P100,000 is provided on the contract price. What amount of revenue from sale should Joy
Company recognized upon the completion of the sale transaction?
Case 9. Hazel Corporation has an income tax rate of 32%and income before non-operating items of P524,000. It also has
the following items (at gross amounts): Unusual loss, P74,000; Discontinued operation loss, P202,000; gain from the
disposal of equipment, P16,000 and change in accounting principle increasing prior year’s income, P106,000. What is the
amount of income tax expense Hazel Corporation would report on its statement of comprehensive income?
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