Republic of the Philippines

Department of Education
Region IV (A) – CALABARZON
City Schools Division Office of Antipolo
District II – A

SAN JOSE NATIONAL HIGH SCHOOL

Sen. L. Sumulong Memorial Circle Pulong Banal Brgy. San Jose, Antipolo City

Grade 12
Learners Activity Sheet for:

Quarter 1: *Module 3
Week 2-3 MELC3
Statement of Comprehensive Income

I. Objectives: At the end of the lesson you should be able to:

prepare an SCI for a merchandising business using the multistep approach

A. Content Standard
The learner demonstrates understanding of the service income and operating expenses of a
service business as well as sales, contra sales, purchases, contra purchase accounts, cost of goods sold
and general administrative and selling expenses of a merchandising business that will equip him/her in
the preparation of the SCI for both service and merchandising businesses.

B. Performance Standard
The learners shall be able to solve exercises and problems that require preparation of SCI for a
service business and a merchandising business.

C. Most Essential Learning Competency/ies:

prepare an SCI for a merchandising business using the multistep approach ABM_FABM12- Ic-d-7
What I need to know?
What to Learn?
At the end of the lesson, the learners will be able to:
A. Prepare Statement of Comprehensive Income of a Merchandising Business Using a Multi-Step
Approach ABM_FABM12-Ic-d-7)

What’s new?
“Picture Perfect”
Direction: Study the picture below. Tell your insights in three to four sentences and answer the process question
below. Write your answer in a separate sheet of paper.

Guide question:
What have you seen in the picture?
Discuss the difference between the two objects.

What I know?
Direction: Answer the crossword puzzle below.

What’s in?
Direction: Solve for the net income or net loss for the following independent cases.
1. If Income is Php20,000.00 and Expenses are Php15,000 Net income /(Net Loss ) is _________
2. If Income is Php75,000.00 and Expenses are Php100,000 Net income /(Net Loss ) is _________
3. If Income is Php85,000.00 and Expenses are Php65,000 Net income /(Net Loss ) is _________
4. If Income is Php56,000.00 and Expenses are Php100,000 Net income /(Net Loss ) is _________
5. If Income is Php88,000.00 and Expenses are Php200,000 Net income /(Net Loss ) is _________

What is it?
According to Haddock, Price and Farina (2012), the elements of a multi-Step approach of a merchandising
company are as follows: First part is Sale, the total amount of revenue that the company was able to generate
from selling products.
The second part is contra revenue. Sales Returns record returns of customers or allowances for such returns. Sales
returns occur when customers return their products for reasons such as but not limited to defects or change of
preference. Sales discount is discount given to customers who pay early and is also known as cash discount.
Sales discount is awarded to customers who pay earlier or before the deadline.

For the third part is Cost of Goods Sold. This account represents the actual cost of merchandise that the company
was able to sell during the year. Beginning Inventory is the amount of inventory at the beginning of the
accounting period. This is also the amount of ending inventory from the previous period. Net Cost of Purchases is
equal to Purchases plus Freight- In. Net Purchases is Purchases minus the contra purchases account (Purchase
discount and purchase returns). Purchases is an amount of goods bought during the current accounting period.
Contra Purchases is an account that is credited being “contrary” to the normal balance of purchases account.
Purchase discount is account used to record early payments by the company to the suppliers of merchandise.
Purchase returns is account used to record merchandise returned by the company to their suppliers. Freight In is
an account used to record transportation costs of merchandise purchased by the company. This is called freight
in because this is recorded when goods are transported into the company. You have to add beginning inventory
and net cost of purchases for you to get the cost of goods available for sale. Ending Inventory is the total cost of
inventory unsold at the end of the accounting cycle. Sales less cost of goods sold is Gross Profit.

Fourth Part is General and Administrative Expenses. These expenses are not directly related to the merchandising
function of the company but are necessary for the business to operate effectively.

Fifth Part is Selling Expenses, these expenses are those that are directly related to the main purpose of a
merchandising business: the sale and delivery of merchandise. These do not include cost of goods sold and
contra revenue accounts. Gross Profit less general and administrative expenses and selling expenses will yield a
net income for a positive result while net Loss for a negative result.

What’s more?
Activity 1. Direction: Determine whether the account title is general or selling.
1. Salaries of administrative assistant
2. Salaries of utility staff
3. Salaries of sales agents
4. Light and water of home office
5. Rental of Sales office building
6. Depreciation of office equipment
7. Depreciation of delivery van
8. Advertising expenses
9. Commission expense
10. Sales Commission of Account Executive
Activity 2. Direction:. Solve for the elements of Comprehensive Income for the following independent Activity:
1. Joy Ride Company’s salaries to sales agents amounted to Php10,000. Salaries of accountants amounted to
Php20,000. No other expenses were incurred. How much is the company’s general and administrative expense?
2. Joy Ride’s beginning inventory amounted to Php250,000. Net purchases amounted to Php70,000. Freight is
15,000. Compute for the company’s cost of goods available for sale.
3. Joy Ride’s purchases is Php100,000 while purchase returns and purchase discounts amounted to Php20,000
and Php10,000 respectively. How much is the company’s purchases?
4. Company’s Cost of Goods Sold amounted to Php235,000. Net cost of purchases totaled Php85,000. Beginning
inventory amounted to Php250,000. Sales amounted to Php500,000. Compute for the company’s Ending
Inventory.
5. Gross profit of Happy Joy Ride amounted to Php175,000. Net Sales is Php300,000, compute for cost of goods
sold?

What I can do?

Instructions: Prepare a multi-step Statement of Comprehensive Income for the following accounts taken from
Tin’s Ready to Wear Company for the period ended of December 31, 2019

Net Sales Php75, 000.00,

Cost of Sales Php30, 000.00,
General and Administrative Expenses Php12,000.00
Selling Expenses Php25, 000.00

What other Enrichment activities can I engage in? (Additional Activities)

Instruction: Prepare the Statement of Comprehensive income using a Multi-step Approach:
Sales Php80,000.00
Sales Returns 2,000.00
Sales Discount 5,000.00
Merchandise Inventory beg Php5,000.00
Net Purchases 10, 500.00
Freight In 8,000.00
Merchandise Inventory End 3,500.00
General Expenses 12,000.00
Selling Expenses 4,000.00

What I have learned? (Application)

Directions: Read the sentences and fill in the blanks
The elements of a Comprehensive Income for a merchandising business are __________, ______________, and
_______________. Expenses are presented according to function of expense method which is a Multi-Step
Approach for a merchandising business. Other expenses under the function of expense method are distribution
cost, administrative expenses, other expenses, interest expense and income tax expense.

1. _____________ is equal to sales less contra sales account (sales returns and allowances and sales discount )
2. _______________ is equal to net Sales less Cost of Goods Sold (Cost of Sales)
3. To arrive at cost of sales, you have to deduct merchandise inventory end to the cost of goods available for
sales.
4. To get the amount of _________________, you have add net cost of purchases to merchandise inventory
beginning.
5. Add ____________ to Net purchases to get the Net Cost of purchases
6. ________________ is equal to purchases less purchase discount and purchase returns and allowances.

What I can do? (Assessment)

Quiz #1 Directions: Choose the letter corresponding to the correct answer for each of the questions provided
below:
Marie Co Company’s accounts show the following balances as June 30, 2020 :
Net Sales Php1,250,000.00
Cost of Sales 380,000.00
Rent Expense (3/4 pertains to the Sales Department) 20,000.00
Salaries Expense (2/5 pertains to General & Admin) 250,000.00
Sales Commission Expense 80,000.00
Freight Out 50,000.00
Insurance Expense 25,000.00
Interest Expense 10,000.00
Other comprehensive income 30,000.00

1. What is the gross profit of Marie Co?

a. Php870,000 c. Php1,520,000
b. Php280.000 d. Php1,200,000
2. What is the amount of salaries attributable to non-sales personnel?
a. Php250,000 c. Php100,000
b. Php150,000 d. Php50,000
3. What is the rent expense attributable to Sales Department?
a. Php120,000 c. Php80,000
b. Php90,000 d. Php100,000
4. How much is the total General and Administrative Expenses?
a. Php250,000 c. Php155,000
b. Php125,000 d. Php165,000
5. How much is the total Selling Expenses?
a. Php370,000 c. Php365,000
b. Php320,000 d. Php300,00
6. How much is the comprehensive income of Marie Co?
a. Php315,000 c. Php365,000
b. Php380,000 d. Php120,000

Reflection
Based on the activity/ies conducted, complete the statement stated below:

✓ I understand that ___________________________________________________________________

____________________________________________________________________________________

✓ I realize that ________________________________________________________________________

____________________________________________________________________________________

Prepared by:

AISA A. MARTILLANA
Teacher, Fundamentals of Accountancy, Business & Management 2

Checked by:

DR. JOSE S. HILARIO

Master Teacher I

Noted by:

DR. ROWENA B. SISON

School Head ,

References:
Department of Education – Division of City Schools Manila (ADM). Module 3 pp. 3-15