STATEMENT OF COMPREHENSIVE INCOME

1.) Brock Company reported operating expenses in two categories, namely distribution and genereal and
administrative. The adjusted trial balance at year-end included the following expense and loss accounts
for current year?

Accounting and legal fees 1,200,000

Advertising 1,500,000
Freight out 800,000
Interest 700,000
Loss on sale of long-term investment 300,000
Officers’ salaries 2,250,000
Rent for office space 2,200,000
Sales salaries and commissions 1,400,000

One-half of the rented premises is occupied by the sales department.

What amount should be reported as total distribution costs?

a. 4,800,000
b. 4,000,000
c. 3,700,000
d. 3,600,000

2.) Lee Company reported the following data for the current year:

Legal and audit fees 1,700,000

Rent for office space 2,400,000
Interest on inventory loan 2,100,000
Loss on abandoned data processing equipment 350,000

The office space is used equally by the sales and accounting departments.
What amount should be classified as general and administrative expenses?

a. 2,900,000
b. 3,250,000
c. 4,100,000
d. 5,000,000

3.) Griff Company reported the following data for the current year:

Accounting and legal fees 250,000

Freight in 1,750,000
 Freight out 1,600,000
Officers’ salaries 1,500,000
Insurance 850,000
Sales representative salaries 2,150,000

What amount should be reported as administrative expenses?

a. 2,600,000
b. 5,500,000
c. 6,350,000
d. 8,100,000

4.) Dell Company provided the following information for the current year:

Purchases 5,300,000
Purchase discounts 100,000
Beginning inventory 1,600,000
Ending inventory 2,150,000
Freight out 400,000

What is the cost of goods sold for the current year?

a. 4,650,000
b. 4,750,000
c. 5,050,000
d. 5,850,000

5.) Bart Company provided the following information for the current year:

Disbursement for purchases 5,800,000

Increase in trade accounts payable 500,000
Decrease in merchandise inventory 200,000

What is the cost of goods sold for the current year?

a. 6,500,000
b. 6,100,000
c. 5,500,000
d. 5,100,000

6.) Vigor Company provided the following information for the current year:

Net accounts receivable at January 1 900,000

 Net accounts receivable at December 31 1,000,000
Accounts receivable turnover 5 to 1
Inventory at January 1 1,100,000
Inventory at December 31 1,200,000
Inventory turnover 4 to 1

What is the gross margin for the current year?

a. 150,000
b. 200,000
c. 300,000
d. 400,000

7.) Hiligaynon Company provided the following information for the current year:

Beginning inventory 400,000

Freight in 300,000
Purchase returns 900,000
Ending inventory 500,000
Selling expenses 1,250,000
Sales discount 250,000

The cost of goods sold is six times the selling expenses.

What is the amount of gross purchase?

a. 6,500,000
b. 6,700,000
c. 8,000,000
d. 8,200,000

8.) Bicolano Company provided the following information for the current year:

Inventory, January 1 2,000,000

Purchases 7,500,000
Purchase returns and allowances 500,000
Sales returns and allowances 750,000
Inventory on December 31 2,800,000
Gross profit rate on net sales 20%

What is the amount of gross sales for the current year?

a. 7,750,000
b. 8,500,000
c. 7,000,000
d. 9,125,000

9.) Kay Company 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

What is the cost of goods sold for the current year?

a. 9,950,000
b. 9,550,000
c. 9,250,000
d. 9,150,000

10.) Sheraton Company reported the following information for the current year:

Ending goods in process 1,000,000

Depreciation on factory building 320,000
Beginning raw materials 400,000
Direct labor 1,980,000
Factory supervisor’s salary 560,000
Depreciation on headquarters building 210,000
Beginning goods in process 760,000
Ending raw materials 340,000
Indirect labor 360,000
Purchases of raw materials 2,300,000

What is the cost of goods manufactured for the current year?

a. 5,340,000
b. 5,580,000
c. 5,550,000
d. 5,820,000
11.) Argentina Company incurred the following costs and expenses during the current year:

Raw materials purchases 4,000,000

Direct labor 1,500,000
Indirect labor – factory 800,000
Factory repairs and maintenance 200,000
Taxes on factory building 100,000
Depreciation – factory building 300,000
Taxes on salesroom and general office 150,000
Depreciation – sales equipment 50,000
Advertising 400,000
Sales salaries 500,000
Office salaries 700,000
Utilities (60% applicable to factory) 500,000

Beginning Ending
Raw materials 300,000 450,000
Work in process 400,000 350,000
Finished goods 500,000 700,000

What is the cost of goods manufactured for the current year?

a. 6,900,000
b. 7,200,000
c. 7,100,000
d. 7,300,000

12.) Vane Company provided the following trial balance of income statement accounts for the current year:

Debit Credit
Sales 5,750,000
Cost of sales 2,400,000
Administrative expenses 700,000
Loss on sale of equipment 100,000
Sales commissions 500,000
Interest revenue 250,000
Freight out 150,000
Loss on early retirement of long-term debt 200,000
Uncollectible accounts expense 150,000
4,200,000 6,000,000
 Finished goods inventory:
January 1 4,000,000
December 31 3,600,000

What amount should be reported as cost of goods manufactured?

a. 2,000,000
b. 2,150,000
c. 2,800,000
d. 2,950,000

13.) Mercury Company showed cost of goods sold of P4,320,000 in its statement of comprehensive income
after the first year of operations. The total manufacturing costs comprised 50% materials used, 30%
direct labor incurred, and 20% manufacturing overhead. Goods in process at year-end were 10% of the
total manufacturing cost. Finished goods at year-end amounted to 20% of the cost of goods
manufactured. What is the amount of the direct labor cost incurred?

a. 1,800,000
b. 2,400,000
c. 3,000,000
d. 5,400,000

14.) Tactful Company reported that the operating expenses other than interest expense for the current year
amount to 40% of cost of sales but only 20% of sales. Interest expense if 5% of sales. The amount of
purchases is 120% of cost of sales. Ending inventory is twice as much as the beginning inventory. The
income after tax of 30% for the current year is P560,000. What is the amount of sales for the current
year?

a. 2,080,000
b. 1,485,000
c. 2,285,000
d. 3,200,000

15.) Jericho Company showed net income of P480,000 in its income statement for the current year. Selling
expenses were equal to 15% of sales and also 25% of cost of sales. All other expenses were 13% of sales.
What is the gross profit for the current year?

a. 4,000,000
b. 2,400,000
c. 1,600,000
d. 2,000,000
16.) The financial records of Ronalyn Company were destroyed by fire at the end of the current year.
However, certain statistical data related to the income statement are available.

Interest expense 20,000

Cost of goods sold 2,000,000
Sales discount 100,000

The beginning inventory was P400,000 and decreased 20% during the year. Administrative expense are
25% of cost of goods sold but only 10% of gross sales. Four-fifths of the operating expenses relate to sale
activities. Ignoring income tax, what is the net income for the current year?

a. 380,000
b. 480,000
c. 330,000
d. 400,000

17.) Thorpe Company reported net income of P7,410,000 for the current year. The auditor raised questions
about the following amounts that had been included in net income:

Unrealized loss on foreign currency translation ( 540,000)

Gain in early retirement of bonds payable 2,200,000
Adjustment of prior of prior year for error
in depreciation (net of tax effect) ( 750,000)
Loss from fire (1,400,000)

What amount should be reported as adjusted net income?

a. 6,500,000
b. 6,610,000
c. 8,160,000
d. 8,700,000

18.) Pearl Company reported income before tax of P5,000,000 for the current year. The auditor questioned
the following amounts that had been included in income before tax:

Equity earnings of Cinn Company – 40% interest 1,600,000

Dividend received from Cinn Company 320,000
Adjustment of profit of prior year
For arithmetical error in depreciation (1,400,000)

What amount should be reported as income before tax?

a. 3,400,000
b. 4,680,000
c. 4,800,000
d. 6,080,000

19.) Witt Company incurred the following during the current year:

a. P350,000 from major strike by employees.

b. P300,000 from condemnation of asset.
c. P250,000 from the abandonment of equipment used in the business.

In the income statement, what is the total amount of infrequent losses that should be reported as
extraordinary?

a. 900,000
b. 600,000
c. 650,000
d. 0

20.) Ocean Company’s comprehensive insurance policy allows its assets to be replaced at current value. The
policy has a P250,000 deductible clause. One of the entity’s waterfront warehouse was destroyed in a
winter storm. Such storms occur approximately every four years. The entity incurred P100,000 of cost in
dismantling the warehouse and plans to replace it. The following data relate to the warehouse:

Current carrying amount 1,500,000

Replacement cost 5,500,000

What amount of gain should be reported as a component of income from continuing operations?

a. 5,150,000
b. 3,900,000
c. 3,650,000
d. 0

21.) Bangladesh Company provided the following information for the current year:

Sales 50,000,000
Cost of goods sold 30,000,000
Distribution costs 5,000,000
General and administrative expenses 4,000,000
Interest expense 2,000,000
Gain on early extinguishment of long-term debit 500,000
 Correction of inventory error, net of income tax – credit 1,000,000
Investment income – equity method 3,000,000
Gain on expropriation 2,000,000
Income tax expense 5,000,000
Dividends declared 2,500,000

What is the income from continuing operations?

a. 9,000,000
b. 8,000,000
c. 9,500,000
d. 7,000,000

22.) Rosebud Company provided the following information for the current year:

Sales 5,000,000
Cost of goods sold 2,800,000
Foreign translation adjustment – credit 400,000
Selling expenses 700,000
Unusual and infrequent error 400,000
Correction of inventory error 200,000
General and administrative expenses 600,000
Income tax expense 150,000
Gain on sale of investment 50,000
Proceeds from sale of land at cost 800,000
Dividends 300,000

What amount should be reported as income from continuing operations?

a. 1,200,000
b. 1,350,000
c. 1,600,000
d. 2,000,000

23.) Corazon Company provided the following information for the current year:

Sales 7,000,000
Sales returns and allowances 100,000
Cost of goods sold 2,800,000
Utilities expense 1,000,000
Interest revenue 150,000
Income tax expense 800,000
 Casualty loss due to earthquake 50,000
Finance cost 200,000
Salaries expense 600,000
Loss on sale of investment 50,000

What amount should be reported as income from continuing operations?

a. 1,550,000
b. 1,600,000
c. 2,350,000
d. 1,400,000

24.) Igloo Company provided the following information for the current year:

Uncollectible accounts expense 2,000,000

Freight out 3,500,000
Cost of sales 40,000,000
Loss on sale of equipment 1,500,000
Loss from typhoon 3,000,000
Sales 90,000,000
Interest income 4,000,000
Administrative expense 10,000,000
Finished goods inventory, January 1 60,000,000
Sales commissions 7,000,000
Finished goods inventory, December 31 55,000,000
Income tax rate 30%

What amount should be reported as income from continuing operations?

a. 30,000,000
b. 19,500,000
c. 27,000,000
d. 18,900,000

25.) Remy Company had the following events and transactions during 2013:

 Depreciation for 2011 was understated by P300,000.

 A litigation settlement resulted in a loss of P250,000.
 The Inventory on December 31, 2011 was over stated by P200,000.
 The entity disposed of a recreational division at a loss of P500,000.
 The income tax rate is 30%. What is the effect of these events on the income from continuing operations
for 2013?

a. 175,000
b. 385,000
c. 665,000
d. 525,000

26.) Sky Company reported the following date for the current year:

Income from continuing operations 450,000

Net income 405,000
Selling and administrative expenses 2,250,000
Income before income tax 900,000

What amount should be reported as income or loss from discontinued operations?

a. 450,000 income
b. 360,000 income
c. 90,000 loss
d. 45,000 loss

27.) Alladin Company provided the following for the current year:

Net income 3,500,000

Unrealized gain on derivative contract 250,000
Foreign currency translation adujstment – debit 50,000
Revaluation surplus 1,000,000

What is the comprehensive income for the current year?

a. 3,700,000
b. 4,700,000
c. 4,800,000
d. 4,500,000

28.) Brass Company provided the following data for the current year:

Income from continuing operations 8,000,000

Actuarial loss recognized in other
comprehensive income 2,000,000
Dividend paid 700,000
 Casualty loss (not included in income) 500,000

What is the profit for the current year?

a. 8,000,000
b. 7,500,000
c. 5,500,000
d. 6,800,000

29.) Rose Company, an investment entity, provided the following income and expenses for the current year:

Dividend income from investments 9,200,000

Distribution income from trusts 500,000
Interest income on deposits 700,000
Income from bank treasury bills 100,000
Unrealized gain on derivative account 400,000
Income from dealing in securities and derivatives held
for trading 600,000
Writedown of securities and derivatives held for trading 150,000
Other income 250,000
Finance cost 300,000
Administrative staff costs 3,800,000
Sundry administrative costs 1,200,000
Income tax expense 1, 700,000

What is the comprehensive income of the current year?

a. 4,200,000
b. 4,600,000
c. 3,800,000
d. 9,200,000

30.) Dahlia Company provided the following information for the current year:

Sales 9,500,000
Interest revenue 250,000
Gain sale of equipment 100,000
Revaluation surplus during the year 1,200,000
Share of profit of associate 350,000
Cost of goods sold 6,000,000
Finance cost 150,000
Distribution costs 500,000
 Administrative expenses 300,000
Translation loss in foreign operation 200,000
Income tax expense 950,000

What is the net income for the current year?

a. 2,300,000
b. 3,300,000
c. 4,200,000
d. 2,100,000

31.) Lotus Company provided the following date for the current year:

Sales 9,750,000
Share of profit of associate 450,000
Decrease in inventory of finished goods 250,000
Raw materials and consumables used 3,500,000
Employee benefit expense 1,500,000
Translation gain on foreign operation 300,000
Impairment loss 800,000
Finance cot 350,000
Other operating expenses 900,000
Income tax expenses 900,000
Unrealized gain on internet swap 200,000

What is the net income for the current year?

a. 2,900,000
b. 2,500,000
c. 2,000,000
d. 1,850,000

32.) Mount Isarog Company provided the following data for the current year:

Retained earnings, January 1 3,000,000

Dividends 1,000,000
Sales 8,350,000
Dividend income 100,000
Inventory, January 1 1,040,000
Purchases 3,720,000
Salaries 1,540,000
Contribution to employees’ pension fund 280,000
 Delivery 205,000
Miscellaneous expense 125,000
Doubtful accounts expense 10,000
Depreciation expense 85,000
Loss on sale of securities 40,000
Loss on inventory writedown 150,000
Income tax 753,000

Inventory on December 31 was valued at P700,000(P850,000 less P150,000 writedown of obsolete

inventory).

1. What is the cost of goods sold?

a. 4,760,000
b. 4,060,000
c. 3,910,000
d. 4,210,000

2. What is the income from continuing operations?

a. 2,105,000
b. 1,370,000
c. 1,520,009
d. 1 410,000

3. What is the balance of retained earnings on December?

a. 4,370,000
b. 3,370,000
c. 4,520,000
d. 3,520,000

33.) While preparing the 2013 financial statements, Dek Company discovered computational errors in the
2012 and 2011 depreciation expense. These errors resulted in overstatement of each year’s income by
P100,000, net of income tax. The following amounts were reported in the previously issued financial
statements:

2012 2011
Retained earnings, January 1 2,800,000 2,000,000
Net income 600,000 800,000
 The net income for 2013 is correctly reported at P700,000. What is the correct balance of retained
earnings on December 31, 2103?

a. 3,900,000
b. 4,100,000
c. 4,300,000
d. 4,000,000