Problem 4-11 (PHILCPA Adapted) Ronalyn Company reported that the financial records were destroyed by fire at the end of the current year, He ver, certain statistical data related to the income statement are Interest expense 200,000 Cost of goods sold 3,000,000 Sales discount 300,000 The beginning inventory was P500,000 and decreased 20% during the year. Administrative expenses are 25% of cost of goods sold but only 10% of gross sales. Distribution costs represent 70% of the operating expenses. 1. What amount should be reported as gross sales?Solution 4-11 Question I Answer @ 9 Cost of goods sold (10% / 25%) Cost of goods sold Divide by cost ratio Gross sales Question 2 Answer b x 7,500,000) enses (10% (750,000 / 30%) Administrative xP Operating expenses ‘Administrative expenses Distribution costs Question 3 Answer a Sales Sales discount Net sales Cost of goods sold Gross income Administrative expenses Distribution costs Interest expense Income before income tax 8 4,200,000 (_ 750,000) (1,750,000) | (200,000) | 1,500,000