DEPARTAMENTO DE CONTABILIDAD Y ECONOMÍA FINANCIERA

ESCUELA UNIVERSITARIA DE ESTUDIOS EMPRESARIALES

FINANCIAL ACCOUNTING

(DIPLOMATURA EN CIENCIAS EMPRESARIALES, 2º CURSO, GRUPO 5)

2008-2009

EXERCISES LESSON 4
INCOME STATEMENT

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 INCOME STATEMENT: LESSON 4

EXERCISE 1 (LESSON 4)

The following list of accounts for Company Jan Ltd. is available at the end of 200X.

ACCOUNT AMOUNT
Advertisement expenses 15,500
Change in inventory of goods for sale (increase) 1,200
Discount for volume of sale 150,000
Grants, donations and legacies transferred to income for the year 12,000
Income tax 3,500
Insurance expense 14,500
Intangible assets depreciation expense 10,800
Interest from long term loans to other companies 25,000
Interest of debt from financial institutions 120,000
Losses for uncollective accounts 1,200
Losses from disposal of tangible fixed assets 2,640
Losses from impairment of inventory of goods for sale 800
Losses from impairment of trade accounts receivable 3,600
Purchase of goods for sale 1,854,000
Purchase returns of goods for sale 30,000
Rent revenue 4,800
Repairs and conservation 9,600
Revenue form holdings in equity instruments, other companies 1,200
Reversion of impairment of trade accounts receivable 2,000
Sale of goods for sale 3,109,440
Social security in charge of the company 168,000
Tangible assets depreciation expense 30,000
Wages and salaries 840,000
Work performed for own assets 45,000

REQUIRED:

1) Calculate the net turnover.

2) Calculate the consumption of goods for sale
3) Prepare the Income Statement for year 200X according to the model established in the new P.G.C.

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EXERCISE 2 (LESSON 4)

The following list of accounts for Company Feb Ltd. is available at the end of 200X.

ACCOUNT AMOUNT
Change in inventory of finished goods (increase) 314
Change in inventory of raw materials (decrease) 4.242
Discount for volume of sale of finished goods 36.000
Exceptional expenses 30.600
Expense for the provision for trade operations 240
Income tax 105
Insurance expense 63.410
Intangible assets depreciation expense 62.900
Interest of debt from financial institutions 15.160
Interest of debt from subsidiaries 19.300
Losses from disposal of tangible fixed assets 1.440
Losses from impairment of inventory of raw materials 2.178
Losses from impairment of tangible fixed assets 1.297
Losses from impairment of trade accounts receivable 15.554
Negative exchange differences 96
Operating grants, donations and legacies 14.818
Profits from equity and debt instruments 1.200
Purchase of raw materials 180.500
Purchase returns of raw materials 5.085
Redundancy pays 8.800
Rent expense 107.797
Revenue form holdings in equity instruments, other companies 91
Revenue form holdings in equity instruments, subsidiaries 800
Reversion of impairment of inventory of raw materials 3.178
Reversion of impairment of trade accounts receivable 15.884
Sale of finished goods 745.300
Sale returns of finished goods 2.120
Services rendered 33.720
Social security in charge of the company 33.620
Supplies 82.433
Tangible assets depreciation expense 44.800
Taxes other than income tax 1.640
Wages and salaries 117.400
Work performed by other companies 187

REQUIRED:

4) Calculate the net turnover.

5) Calculate the consumption of goods for sale
6) Prepare the Income Statement for year 200X according to the model established in the new P.G.C.

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EXERCISE 3 (LESSON 4)

The following list of accounts for Company Mar Ltd. is available at the end of 200X.

ACCOUNT AMOUNT
Change in inventory of raw materials (*) ¿?
Discount for volume of purchase of goods for sale 1,000
Excess of provision for trade operations 60
Excess of provisions for other responsibilities 420
Expense for the provision for trade operations 180
Financial expenses from capitalization of provisions 15
Gains from disposal of investment property 300
Income tax 2,233
Interest of debt from financial institutions 55
Interest of discounting of bill of exchange in financial institutions 35
Investment property depreciation expense 25
Losses from impairment of inventory of goods for sale 50
Operating grants, donations and legacies 100
Profits from held for trading portfolio 40
Purchase discount for early payments 800
Purchase of goods for sale 15,000
Rent expense 120
Rent revenue 220
Revenue form holdings in equity instruments, subsidiaries 18
Revenue from debt instrument, other companies 21
Reversion of impairment of inventory of goods for sale 100
Sale of finished goods 22,000
Sale returns of finished goods 800
Services from independent professionals 75
Social security in charge of the company 60
Tangible assets depreciation expense 100
Wages and salaries 220
Work performed for own assets 300

(*) The value of the initial inventory was 3,200 €. The value of the final inventory is 2,000 €.

REQUIRED:

7) Calculate the net turnover.

8) Calculate the consumption of goods for sale.
9) Prepare the Income Statement for year 200X according to the model established in the new
P.G.C.

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EXERCISE 4 (LESSON 4) - From exam of course 0708

Company X, Inc. shows the following list of accounts in its adjusted trial balance at the end of year 2008.

ACCOUNT AMOUNT
Capital grants, donations and legacies transferred to income for the year 2,250
Change in inventory of goods for sale (*) ¿?
Discount for volume of purchase of goods for sale 1,500
Discount for volume of sale of goods for sale 4,300
Excess of provision for trade operations 615
Expense for the provision for trade operations 1,095
Income tax 9,544
Insurance expense 600
Intangible assets depreciation expense 1,000
Interest of debt from financial institutions 1,100
Investment property depreciation expense 2,250
Losses from available for sale financial instruments 800
Losses from impairment of inventory of goods for sale 500
Losses from impairment of long term loans 200
Losses from impairment of tangible fixed assets 1,300
Losses from impairment of trade accounts receivable 1,530
Purchase discount for early payments 600
Purchase of goods for sale 42,350
Purchase returns of goods for sale 1,300
Rent revenue 1,200
Repairs and conservation 1,500
Revenue form holdings in equity instruments, other companies 2,480
Revenue from long term loans to other companies 1,790
Reversion of impairment of inventory of goods for sale 1,000
Sale of goods for sale 57,300
Sale returns 2,113
Services from independent professionals 345
Services rendered 48,721
Social security in charge of the company 3,480
Supplies 3,800
Tangible assets depreciation expense 3,000
Wages and salaries 17,400

(*) The value of the initial inventory of goods for sale was 1,086. The value of the final inventory is 2,807.

REQUIRED:
a) Calculate the net turnover.
c) Calculate the consumption of goods for sale.
b) Prepare the Income Statement according to the format established by the P.G.C. 2007.

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 (Debit) Credit
200X
A) CONTINUING OPERATIONS
1. Net turnover. 99.608
a) Sales. 50.887
Sale of goods for sale 57.300
Discount for volume of sale of goods for sale - 4.300
Sale returns - 2.113
b) Services rendered. 48.721
Services rendered 48.721
2. Change in inventory of finished goods and work-in process.
3. Work performed for own assets.
4. Procurements. - 36.729
a) Consumption of goods for sale. - 37.229
Purchase of goods for sale - 42.350
Discount for volume of purchase of goods for sale 1.500
Purchase returns of goods for sale 1.300
Purchase discount for early payments 600
Change in inventory of raw materials (increase) 1.721
b) Consumption of raw materials and other consumables.
c) Work performed by other companies.
d) Impairment of goods for sale, raw materials and other consumables. 500
Losses from impairment of inventory of goods for sale - 500
Reversion of impairment of inventory of goods for sale 1.000
5. Other operating revenues. 1.200
a) Accesory and other ordinary income. 1.200
Rent revenue 1.200
b) Operating subventions included in income for the year.
6. Personnel expenses. - 20.880
a) Wages, salaries and similar expenses. - 17.400
Wages and salaries - 17.400
b) Employee welfare expenses. - 3.480
Social security in charge of the company - 3.480
c) Provisions.
7. Other operating expenses. - 8.255
a) Outside services. - 6.245
Supplies - 3.800
Insurance expense - 600
Services from independent profesionals - 345
Repairs and conservation - 1.500
b) Taxes other than income tax.
c) Losses, impairment and change in provisions for trade operations. - 2.010
Expense for the provision for trade operations - 1.095
Losses from impairment of trade accounts receivable - 1.530
Excess of provision for trade operations 615
d) Other operating expenses.
8. Fixed assets depreciation expense. - 6.250
Investment property depreciation expense - 2.250
Intangible assets depreciation expense - 1.000

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Tangible assets depreciation expense - 3.000
9. Transfer of grants of non-financial non-current assets and others. 2.250
Capital grants, donations and legacies transferred to income for the year 2.250
10. Excess of provisions.
11. Impairment and income from disposal of non-current assets. - 1.300
a) Impairment and losses. - 1.300
Losses from impairment of tangible fixed assets - 1.300
b) Income from disposals and others.
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11+12) 29.644
12. Financial revenues. 4.270
a) From holdings in equity instruments. 2.480
a1) Of subsidiaries and associated companies.
a2) Of third parties. 2.480
Revenue form holdings in equity instruments, other companies 2.480
b) From marketable securities and other financial instruments. 1.790
b 1) Of subsidiaries and associated companies.
b 2) Of third parties. 1.790
Revenue from long term loans to other companies 1.790
13. Financial expenses. - 1.100
a) Of subsidiaries and associated companies.
b) Of third parties. - 1.100
Interest of debt from financial institutions - 1.100
c) From capitalization of provisions.
14. Change in fair value of financial instruments. - 800
a) Held for trading and others.
b) Transfer to income for the year for available for sale financial instruments. - 800
Losses from available for sale financial instruments - 800
15. Exchange differences.
16. Impairment and income from disposal of financial instruments. - 200
a) Impairment and losses. - 200
Losses from impairment of long term loans - 200
b) Income from disposals and others.
A.2) FINANCIAL INCOME (12+13+14+15+16) 2.170
A.3) INCOME BEFORE TAXES (A.1+A.2) 31.814
17. Income tax. - 9.544
Income tax - 9.544
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 22.270
B) DISCONTINUED OPERATIONS
18. Post-tax income of discontinued operations.
A.5) INCOME FOR THE YEAR (A.4+18) 22.270

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 200X
A) CONTINUING OPERATIONS
1. Net turnover. 99.608
a) Sales. 50.887
b) Services rendered. 48.721
2. Change in inventory of finished goods and work-in process.
3. Work performed for own assets.
4. Procurements. - 36.729
a) Consumption of goods for sale. - 37.229
b) Consumption of raw materials and other consumables.
c) Work performed by other companies.
d) Impairment of goods for sale, raw materials and other consumables. 500
5. Other operating revenues. 1.200
a) Accesory and other ordinary income. 1.200
b) Operating subventions included in income for the year.
6. Personnel expenses. - 20.880
a) Wages, salaries and similar expenses. - 17.400
b) Employee welfare expenses. - 3.480
c) Provisions.
7. Other operating expenses. - 8.255
a) Outside services. - 6.245
b) Taxes other than income tax.
c) Losses, impairment and change in provisions for trade operations. - 2.010
d) Other operating expenses.
8. Fixed assets depreciation expense. - 6.250
9. Transfer of grants of non-financial non-current assets and others. 2.250
10. Excess of provisions.
11. Impairment and income from disposal of non-current assets. - 1.300
a) Impairment and losses. - 1.300
b) Income from disposals and others.
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11+12) 29.644
12. Financial revenues. 4.270
a) From holdings in equity instruments. 2.480
a1) Of subsidiaries and associated companies.
a2) Of third parties. 2.480
b) From marketable securities and other financial instruments. 1.790
b 1) Of subsidiaries and associated companies.
b 2) Of third parties. 1.790
13. Financial expenses. - 1.100
a) Of subsidiaries and associated companies.
b) Of third parties. - 1.100
c) From capitalization of provisions.
14. Change in fair value of financial instruments. - 800
a) Held for trading and others.
b) Transfer to income for the year for available for sale financial
- 800
instruments.
15. Exchange differences.
16. Impairment and income from disposal of financial instruments. - 200
a) Impairment and losses. - 200

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b) Income from disposals and others.
A.2) FINANCIAL INCOME (12+13+14+15+16) 2.170
A.3) INCOME BEFORE TAXES (A.1+A.2) 31.814
17. Income tax. - 9.544
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+17) 22.270
B) DISCONTINUED OPERATIONS
18. Post-tax income of discontinued operations.
A.5) INCOME FOR THE YEAR (A.4+18) 22.270

EXERCISE 5 (LESSON 4) - From exam of course 0708

Company X, Inc. shows the following list of accounts in its adjusted trial balance at the end of year 200X.

Change in inventory of finished goods (Final inventory > Initial inventory) 500
Change in inventory of raw materials (Final inventory < Initial inventory) 120
Discount for volume of purchase of raw materials 100
Exceptional revenue 1,200
Excess of provision for restructuring 420
Income tax expense 6,824
Interest of debt from financial institutions 90
Investment property depreciation expense 25
Losses for uncollective accounts 60
Losses from impairment of investment property 75
Losses from impairment of trade accounts receivable 180
Losses of held for trading portfolio 40
Operating grants, donations and legacies 100
Profits from disposal of tangible fixed assets 300
Purchase discount for early payments 80
Purchase of raw materials 5,000
Rent expense 120
Rent revenue 220
Revenue of long term loans to subsidiaries 36
Reversion of impairment of inventory of raw materials 50
Reversion of impairment of long term holdings in equity, subsidiaries 189
Reversion of impairment of trade accounts receivable 100
Sale of finished goods 20,000
Sales returns 800
Services from independent professionals 60
Social security in charge of the company 60
Tangible fixed assets depreciation expense 100
Wages and salaries 220
Work performed by other companies 200
Work performed for own assets 300

REQUIRED: Prepare the Income Statement according to the format established by the P.G.C. 2007.

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 (Debit) Credit
200X
A) CONTINUING OPERATIONS
1. Net turnover. 19.200
a) Sales. 19.200
Sale of finished goods 20.000
Sale returns of finished goods - 800
b) Services rendered.
2. Change in inventory of finished goods and work-in process. 500
Change in inventory of finished goods (increase) 500
3. Work performed for own assets. 300
Work performed for own assets 300
4. Procurements. - 4.690
a) Consumption of goods for sale.
b) Consumption of raw materials and other consumables. - 4.940
Purchase of raw materials - 5.000
Discount for volume of purchase of raw materials 100
Purchase discounts for early payments 80
Change in inventory of raw materials (decrease) - 120
c) Work performed by other companies. 200
Work performed by other companies 200
d) Impairment of goods for sale, raw materials and other consumables. 50
Reversion of impairment of inventory of raw materials 50
5. Other operating revenues. 320
a) Accesory and other ordinary income. 220
Rent revenue 220
b) Operating subventions included in income for the year. 100
Operating grants, donations and legacies 100
6. Personnel expenses. - 280
a) Wages, salaries and similar expenses. - 220
Wages and salaries - 220
b) Employee welfare expenses. - 60
Social security in charge of the company - 60
c) Provisions.
7. Other operating expenses. - 320
a) Outside services. - 180
Rent expense - 120
Services from independent profesionals - 60
b) Taxes other than income tax.
c) Losses, impairment and change in provisions for trade operations. - 140
Losses from impairment of trade accounts receivable - 180
Reversion of impairment of trade accounts receivable 100
Losses for uncollective accounts - 60
d) Other operating expenses.

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8. Fixed assets depreciation expense. - 125
Investment property depreciation expense - 25
Tangible fixed assets depreciation expense - 100
9. Transfer of grants of non-financial non-current assets and others.
10. Excess of provisions. 420
Excess of provisions for reestructuring 420
11. Impairment and income from disposal of non-current assets. 225
a) Impairment and losses. - 75
Losses from impairment of investment property - 75
b) Income from disposals and others. 300
Profits from disposal of tangible fixed assets 300
12. Other income 1.200
Exceptional revenue 1.200
A.1) OPERATING INCOME (1+2+3+4+5+6+7+8+9+10+11+12) 16.750
13. Financial revenues. 36
a) From holdings in equity instruments. -
a1) Of subsidiaries and associated companies.
a2) Of third parties.
b) From marketable securities and other financial instruments. 36
b 1) Of subsidiaries and associated companies. 36
Revenue of long term loans to subsidiaries 36
b 2) Of third parties.
14. Financial expenses. - 90
a) Of subsidiaries and associated companies.
b) Of third parties. - 90
Interest of debt from financial institutions - 90
c) From capitalization of provisions.
15. Change in fair value of financial instruments. - 40
a) Held for trading and others. - 40
Losses of held for trading portfolio - 40
b) Transfer to income for the year for available for sale financial instruments.
16. Exchange differences.
17. Impairment and income from disposal of financial instruments. 189
a) Impairment and losses. 189
Reversion of impairment of long term holdings in equity, subsidiaries 189
b) Income from disposals and others.
A.2) FINANCIAL INCOME (13+14+15+16+17) 95
A.3) INCOME BEFORE TAXES (A.1+A.2) 16.845
18. Income tax. - 6.824
Income tax - 6.824
A.4) INCOME FROM CONTINUING OPERATIONS (A.3+18) 10.021
B) DISCONTINUED OPERATIONS
19. Post-tax income of discontinued operations.
A.5) INCOME FOR THE YEAR (A.4+19) 10.021

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