MINDANAO STATE UNIVERSITY - GENERAL SANTOS CITY

DEPARTMENT OF ACCOUNTANCY

ACT114: INTERMEDIATE ACCOUNTING 3

STATEMENT OF FINANCIAL PERFORMANCE

Practice questions:

1. The following information is available from K Company’s accounting records for the year
2019:

Purchases P5,300,000

Purchase Discount 100,000

Beginning Inventory 1,600,000

Ending Inventory 2,150,000

Freight-out 400,000

K Company’s cost of goods sold is?

2. The following information is available for J Company for the year 2019:

Disbursement for purchases P580,000

Increase in trade accounts payable 50,000

Decrease in merchandise inventory 20,000

Cost of Goods Sold for the year was?

3. The following data were available from K Company’s record on December 31, 2019:

Finished goods inventory - January 1 P1,000,000

Finished goods inventory - December 31 1,200,000

Cost of Goods Manufactured 5,000,000

Loss on sale of plant equipment 100,000

The cost of goods sold for the year was?

4. J Company reports operating expenses as selling and general or administrative. The

adjusted trial balance at December 31, 2019 included the following expense accounts:
 Accounting and legal fees P145,000

Advertising 150,000

Freight out 75,000

Interest 60,000

Loss on sale of long-term investment 30,000

Officer’s salaries 225,000

Property taxes and insurance 30,000

Rent for office supplies 180,000

Sales salaries and commissions 140,000

One-half of the rented premises is occupied by the sales department. How much of the
expenses listed above should be included in J’s selling expenses for 2019?

5. K Corporation’s trial balance of income statement accounts for the year ended December
31, 2019 was as follows:

Net Sales P1,600,000

COGS 960,000

Selling expenses 235,000

Administrative expenses 150,000

Interest expense 25,000

Adjustment due to change in accounting policy 40,000

Gain on sale of land 10,000

Income from continuing operations before tax is?

6. J Corporation’s income statement for the year ended December 31, 2019 reported net
income of P7,410,000. The auditor raised questions about the following amounts that had
been included in net income:

Unrealized loss on available for sale securities (P540,000)

Gain on early retirement of bonds payable 2,200,000

Adjustment of profit of prior year for error in depreciation (750,000)

Loss from fire 1,400,000

The loss from fire was an infrequent but not an unusual occurrence in J’s line of business. J’s
income statement should report net income of?
7. K Company’s income statement for the year ended December 31, 2019, as prepared by K’s
controller, reported income before taxes of P5,000,000. The auditor questioned the following
amounts that had been included in income before tax:

Equity in earnings of Cinn Company P1,600,000

Dividend received from Cinn 320,000

Adjusment of profit of prior year for arithmetical

error in depreciation (1,400,000)

K Company owns 40% of Cinn’s ordinary shares. K’s 2019 income statement should report
income before tax of?