UNIVERSITY OF NUEVA CACERES

City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

CASH AND ACCRUAL BASIS OF ACCOUNTING, SINGLE ENTRY and ERROR CORRECTION
Single entry

Formulas:

1. Computation of net income using Single Entry Method

A. For Single Proprietorship and Partnership

Increase/Decrease in Net Assets:

Capital balance, end Pxx
Capital balance, beginning (xx) Pxx

Withdrawals xx
Additional Investments / Contributions ( xx)
Net Income Pxx

B. For Corporation

Increase/Decrease in Retained earnings:

Retained earnings, end Pxx
Retained earnings, beginning (xx) Pxx

Dividends declared xx
Net Income Pxx

2. Computation of Net Income by Analyzing

Changes in Account Balances

A. For Single Proprietorship and Partnership

Dr(Cr)
Increase in Assets Pxx
Decrease in Assets (xx)
Increase in Liabilities (xx)
Decrease in Liabilities xx
Increase in Net Assets xx
Withdrawals xx
Additional Investments/Contributions (xx)
Net Income Pxx

B. For Corporation
Dr(Cr)
Increase in Assets Pxx
Decrease in Assets (xx)
Increase in Liabilities (xx)
Decrease in Liabilities xx
Increase in Stockholders’ Equity xx
Increase in Contributed Capital (xx)
Decrease in Contributed Capital xx
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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

Increase in Retained Earnings xx

Add: Dividends declared xx
Net Income Pxx
Cash vs. Accrual

Formulas:
Cash Basis Accrual Basis
1. Total Sales

Cash Sales xx xx
Add: Sales on account:
AR and NR, end xx
Collections of AR /NR xx xx
NR Discounted xx
Write off xx
Sales returns and allowances xx
Sales discounts xx
AR and NR, beginning . . (xx)
Total Sales xx xx

Cash Basis Accrual Basis

2. Total Purchases

Cash Purchases xx xx
Add: Purchases on account:
AP and NP, end xx
Payments on AP/NP xx xx
Purchase returns and allowances xx
Purchase discounts
AP and NP, beginning . . (xx)
Total Purchases xx xx

Cash Basis Accrual Basis

3. Expenses in General

Expenses Paid xx xx
Add/(Deduct):
Prepaid expenses, beginning xx
Accrued expenses, end xx
Prepaid expenses, end (xx)
Accrued expenses, beginning . . (xx)
Total Expenses Incurred xx xx

Cash Basis Accrual Basis

4. Other Income

Income (cash) received xx xx

Add/(Deduct):
Unearned income, beginning xx
Accrued income, end xx
Unearned income, end (xx)
Accrued income, beginning . . (xx)
Total Income Earned xx xx

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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

5. Depreciation (applicable to cash and accrual basis)

PPE beg xx
Add: Acquisition / Purchase of PPE xx
Total xx
Less: PPE end xx
Sale or Disposal of PPE xx xx
Depreciation expense xx

--END--

Definition of Terms
 Accounting policies - specific principles, bases, conventions, rules and practices adopted by an
enterprise in preparing and presenting the financial statements.
 Fundamental errors - are errors discovered in the current period with such significance, that
the financial statements of one or more prior periods can no longer be considered to have been reliable at the
date of their issue.

Reasons why Accounting Changes Occur:

1. The accounting profession may mandate that a new accounting principle is to be used.
2. Changing economic conditions
3. Changes in technology and in operations
4. New experience or new information may prompt companies to change its estimate of revenues or expenses.

TYPES OF ACCOUNTING CHANGES

1. Change in Accounting Principles
This is a change from one generally accepted accounting principle to another generally accepted accounting
principle. Adoption of a new principle in recognition of events that have occurred for the 1st time is not a change in
accounting principle. There is no change in accounting principle when the depreciation method adopted for a newly
acquired asset is different from the method or methods used for previously recorded assets of similar class.
A change from a principle that is not generally accepted to one that is generally accepted is considered to be
an error correction than a change in accounting principle.

Accounting Procedure:
Benchmark treatment
A change in accounting policy/principle should be applied retroactively unless the amount of any resulting
adjustment that relates to prior periods is not reasonably determinable. Any resulting adjustment should be reported
as an adjustment to the opening balance of the retained earnings. Comparative information should be restated
unless it is impracticable to do so.

2. Change in Accounting Estimate

This is a change that occur as a result of new information or acquisition of additional experience. Changes in
estimates are viewed as normal recurring corrections and adjustments or the natural result of the accounting
process. Retroactive treatment is prohibited.

Accounting Procedure:
a. Report current and future financial statements on the new basis.
b. Present prior period financial statements as previously reported.
c. Make no adjustment to current period opening balances.

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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

NOTE: Whenever it is impossible to determine whether a change in principle or a change in estimate has occurred,
or if an asset is affected by both a change in principle and a change in estimate during the same period, the change
should be accounted for as a change in estimate rather than a change in principle.

CORRECTION OF ERRORS
No company whether large or small is immune from errors. Errors may be intentional or unintentional.
Intentional errors are significant because of the presence of fraud or intent to deceive. These errors are made for
the purpose of concealing fraud or misappropriation, evading taxes, manipulating or window-dressing the company's
financial statements. Unintentional errors were not deliberately committed. They result from carelessness or
ignorance on the part of the company's personnel or it may result from poor internal control.
The risk of material errors may be minimized through the installation of good internal control and the
application of sound accounting procedures. Prior period adjustments, also called fundamental errors are reported in
the current year as adjustment in the beginning balance of the Retained Earnings account. Prior period statements
should be restated to correct the error when comparative statements are prepared.

Accounting Procedure:
1. If detected in the period the error occurred, correct the accounts through normal accounting cycle
adjustments.
2. If detected in subsequent period, adjust errors by making prior period adjustments directly to
Retained Earnings or restate the beginning balance of the Retained Earnings account.
3. Correct all previously presented prior period statements.

Examples of Accounting errors:

a. A change from an accounting principle that is not generally accepted to an accounting principle that is
generally accepted.
b. Mathematical mistakes
c. Mistake in the application of accounting of accounting principle
d. Oversight
e. Misuse of facts
f. Incorrect classification of expense as an asset or vice versa
g. Changes in estimates which are not prepared in good faith

TYPES OF ERRORS
1. Balance Sheet Errors
This type of error refers to improper classification of real accounts such as assets, liabilities or
stockholders' equity accounts. They have no effect on net income
2. Income Statement Errors
This type of error affects only the presentation of nominal accounts in the Income Statement. It involves
the improper classification of revenues and expenses accounts, hence, only the details of the Income Statement are
misstated. A reclassifying entry is necessary only if the error is discovered in the same year it is committed. It has
no effect on the Balance sheet and in the Income Statement. If the error is discovered in a subsequent year, no
classification entry is necessary.
3. Combined Balance Sheet and Income Statement errors
This affects both the balance Sheet and the Income Statement because they result in the misstatement of
net income.

Classifications of Combined Balance Sheet and Income Statement Errors:

a. Counter Balancing Errors
 Errors which if not detected are automatically offset or corrected over two periods. Restatement is
necessary even if a correcting journal entry is not required.
 Effect: Net Income of two successive periods are misstated. The amount of misstatement in one
period is equal to but opposite in effect in the income of the next period.
 Counterbalancing errors include the misstatements of the following accounts:
1. Inventories to include the following
a. Purchases
b. Sales
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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

2. Prepaid expenses
3. Deferred Income
4. Accrued expense
5. Accrued Income

GUIDELINES
 Books are open
1. If the error is already counterbalanced and the company is in the second year, an entry is
necessary to correct the current period and to adjust the beginning balance of the Retained
earnings.
2. If the error is not yet counterbalanced, an entry is necessary to adjust the beginning balance
of the Retained earnings and correct the current period.
 Books are closed
1. If the error is already counterbalanced, no entry is necessary.
2. If the error is not yet counterbalanced, an entry is necessary to adjust the present balance of
the Retained earnings.

b. Non Counter Balancing Errors

 Errors which take longer than two periods to correct themselves. This type of error is carried over to
the subsequent accounting period until corrected or until the balance sheet item involved is removed
from the accounts by sales, retirement or other means of disposal.

GUIDELINES IN ERROR ANALYSIS

1. What accounts are affected?
2. How were these accounts affected? Was there an understatement or an overstatement?
3. What was the erroneous entry made or what was the entry omitted?
4. What is the correct entry?
5. What is the necessary adjusting or correcting entry?

EXERCISES
1. Aries uses the cash basis of accounting and reported income of P87,000 in 2008. The following items were not considered
in the computation of cash basis net income:
Inventory, beginning P12,000
Inventory, ending 18,000
Receivables, beginning 40,000
Receivables, ending 38,000
Payables, beginning 19,000
Payables, ending 25,000
The accrual basis income is:
(a) P97,000 (b) P89,000 (c) P77,000 (d) P85,000

2. An entity reported sales revenue of P4,600,000 in the income statement for the current year, Additional
information of the current year is as follows;
JANUARY 1 DECEMBER 31
Accounts receivable 1,000,000 1,300,000
Allowance of Doubtful accnts 60,000 110,000
Advances from customers 200,000 300,000
The entity wrote off uncollectible accounts totaling P50,000 during the current year, Under Cash basis, what amount
should be reported as sales revenue for the current year?
a. 4,900,000 b. 4,250,000 c. 4,350,000 d. 4,400,000

3. During 2017, an entity reported gross cash sales of P3,000,000 with related returns and allowances of P100,000
and gross credit sales of 5,000,000 with related discounts of 400,000. On January 1, 2017, customers owed the entity
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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

P1,000,000. On December 31, 2017 customers owed the entity P1,500,000. The entity used the direct write-off
method for bad debts. No band debts were recorded in 2017. Under cash basis, what amount of sales revenue
should be reported for the current year?
a. 7,000,000 b. 8,000,000 c. 7,500,000 d. 8,500,000

4. An entity began operations on January 1, 2017. The entity has elected to use cash basis of accounting for tax
purposes and accrual basis for financial reporting. The entity reported sales of P8,700,000 and P4,000,000 in the tax
returns for 2018 and 2017, respectively. The entity reported accounts receivable of P1,500,000 and P2,500,000 on
December 31, 2018 and December 31, 2017, respectively.

During 2018, the entity paid suppliers P4,900,000 and reported the following balances:
December 31 January 1
Inventory 2,600,000 2,900,000
Accounts payable 750,000 500,000
What amount should be reported as sales in the income statement for 2018
a. 7,250,000 b. 9,750,000 c. 5,500,000 d. 7,750,000

5. What amount should be reported as cost of goods sold in the income statement for 2018?
a. 4,350,000 b. 4,850,000 c. 4,950,000 d. 5,450,00

6. An entity provided the following data for the current year:

January 1 December 31
Accounts Receivable 1,200,000 1,350,000
Accounts Payable 1,500,000 1,850,000

During the current year, accounts written off amounted to P100,000. Sales return totaled P250,000 of which P50,000
was paid to customers. Purchase returns amounted to P400,000, of which P100,000 was received from suppliers.
Cash receipts from customers after P500,000 discounts totaled P8,000,000 while cash payments to trade creditors
after discounts of 200,000 amounted to P5,000,000.
What is the amount of gross sales under the accrual basis?
a. 9,600,000 b. 8,950,000 c. 8,250,000 d. 8,850,000

7. What is the amount of gross purchase under accrual basis?

a. 5,250,000 b. 5,950,000 c. 5,400,000 d. 5,850,000

8. An entity maintains the accounting records on the cash basis but restates the financial statements to the accrual
basis. The entity had P6,000,000 in cash basis net income for the current year. The entity provided the following
information:
January 1 December 31
Accounts Receivable 2,000,000 4,000,000
Accounts Payable 3,000,000 1,500,000
Under the accrual basis, what amount of net income should be reported for current year?
a. 2,500,000 b. 5,500,000 c. 6,500,000 d. 9,500,000
9. An entity borrowed money under various loan agreement involving notes discounted and notes requiring interest
payments at maturity. During the current year, the entity paid interest totaling P6,000,000. The statement of
financial position included the following:
January 1 December 31
Prepaid Interest 500,000 1,500,000
Interest payable 2,000,000 2,500,000
What amount of interest expense should be reported for the current year?
a. 5,500,000 b. 4,500,000 c. 7,500,000 d. 6,500,000

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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

10. An entity assigned some of its patents to other entities under a variety of licensing agreements. The following
data are gathered for the current year: January 1 December 31
Unearned Rpyalties 600,000 400,000
Royalties Receivable 900,000 850,000
During the current year, the entity received royalty remittance of P2,000,000. What amount should be reported as
royalty income for the current year?
a. 1,950,000 b. 2,150,000 c. 2,200,000 d. 2,250,000

11. An entity provided the following increases in account balances that occurred during the current year:
Assets 9,000,000
Liabilities 3,000,000
Share capital 5,000,000
Share premium 500,000
Except for a 2,000,000 share dividend payment, the year’s earnings and a P200,000 prior period error from
understatement of ending inventory there were no other changes in retained earnings for the year. What is the net
income for the current year?
a. 2,500,000 b. 2,300,000 c. 2,700,000 d. 6,000,000

12. An entity reported shareholders equity of P8,000,000 on December 31, 2017. The entity revealed the following
transactions during the year:
 An Adjustment of retained earnings for 2016 under depreciation 300,000
 Gain in sale of treasury shares 500,000
 Dividend declared of which P500,000 was paid 1,500,000
 Net income for 2017 3,000,000
The share capital balance of P5,000,000 remained unchanged during the year. What is the balance of retained
earnings on January 1, 2017?
a. 1,300,000 b. 2,500,000 c. 1,700,000 d. 7,000,000

13. An entity revealed the following changes in the accounts for the current year:
Increase(decerease)
Cash 1,000,000
Accounts Receivable,net of allowance 1,900,000
Inventory 2,200,000
Equipment (1,500,000)
Accounts Payable 500,000
Bonds Payable (2,000,000)
Loan payable 3,000,000
Accrued interest payable 100,000

During the current year, the entity issued 10,000 ordinary shares of P100 par value for 150 per share. Dividend of
P4,000,000 was paid in cash during the year. The entity borrowed P3,000,000 from the bank and made interest
payment of P200,000. The bank loan is unpaid at year-end and the interest payable at year-end was P100,000. There
is no interest payable at the beginning of year. Equipment with fair value of P500,000 was donated by a shareholder
during the year. What is the net income for the current year?
a. 2,000,000 b. 6,000,000 c. 4,500,000 d. 4,000,000

14. An entity reported the following errors:

December 31, 2016 December 31, 2017
Ending Inventory 950,000 overstated 800,000 understated
Depreciation 250,000 understated

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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

An insurance premium of P600,000 was prepaid in 2016 covering the year 2016, 2017 and 2018. The entire amount
was charged to expense in 2016. No corrections have been made for any of the errors. Ignore income tax. What is
the total effect of the errors on retained earnings on December 31, 2017?
a. 800,000 understated b. 800,000 overstated c. 750,000 understated d. 750,000 overstated

15. An entity began operations on January 1, 2016. The financial statement contained the following errors:
2016 2017
Ending Inventory 800,000 under 400,000 under
Depreciation 150,000 under
Insurance expense 50,000 over 50,000 under
Prepaid insurance 50,000 under
In addition, on December 31, 2017, a fully depreciated equipment was sold for P100,000 cash but the sale was not
recorded until 2018. Before income tax, what in the total effect (under/over stated) of the errors on
a. Net income for 2016?
b. Net income for 2017?
c. Working capital on December 31, 2017?
d. Retained earnings on December?

16. Percy Company id engaged in a small export business. The company maintains limited records. Most of the company’s
transactions are summarized in a cash journal; non-cash transactions are recorded by making memo entries. The following are
abstracted from the company’s records:
Accounts receivable 370,000 increase
Notes receivable 200,000 decrease
Accounts payable 150,000 decrease
Notes payable-trade 200,000 increase
Notes payable-bank 300,000 increase
Sales return (P50,000 was refunded) 80,000
Sales discounts 20,000
Purchase returns (P30,000 was refunded) 80,000
Purchase discount 35,000
Accounts written-off 60,000
Recovery of accounts written-off 18,000
Cash sales 300,000
Cash purchases 250,000
Cash received from account customers 1,500,000
Cash payment to trade creditors 1,200,000

a. What is the amount of gross sales?

17. Thomas Company does not keep a full set of business records, but the following information is available for the month of
June 2014:

Trade receivables, June 1, 2014 P80,000

Trade receivable, June 30, 2014 55,000
Credit sales 680,000
Cash received from customers 673,000
Bad debts written-off 4,000
General provision for doubtful debts set up in June 10,000

Assuming no other transactions, how much discount was allowed to customers during the month?

18. The following information is relevant to the calculation of the sales figure for Paulo, a sole trader who does not keep proper
accounting records:

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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

Accounts receivable, January 2, 2014 balance P 291,000

Cash received from credit customers and paid into the bank 3,861,000
Expenses paid out of the cash received from customers before banking 68,000
Bad debts written-off 72,000
Refunds to credit customers 21,000
Discounts allowed to credit customers 94,000
Cash sales 1,120,000
Accounts receivable, December 31, 2014 386,000

What amount of sales revenue should appear in Paulo’s profit or loss for the year ended December 31, 2014?

19. At September 1, 2013, the following existed in the records of Lauren Company:

Plant and equipment P8,600,000

Accumulated depreciation 3,970,000

During the year ended September 30, 2014, plant with a written down value of P370,000 was sold P470,000. The plant had
originally cost P800,000. Plant purchased during the year cost p1,800,000. It is the company’s policy to charge a full year’s
depreciation in the year of acquisition of an asset and none in the year of sale, using the a rate of 10% on the straight-line
basis.

What net amount should appear in Lauren’s statement of financial position at September 30, 2014 for plant and equipment?

19. Graphic Publishers offered a contest in which the winner would receive P1,000,000 payable over 20 years. On December 31,
2014, Graphic announced the winner of the contest and signed a note payable to the winner for P1,000,000, payable in
P50,000 instalments every January 2. Also, on December 31, 2014, Graphic purchased an annuity after the first P50,000
instalment, which was paid on January 2, 2014.

In its 2014, profit or loss, what should Graphic report as contest prize expense?

20. Holiness Company owns an office building and leases the offices under a variety of rental agreements involving rent paid in
advance monthly or annually. Not all tenants make timely payments of their rent. The following data were taken from the
balance sheets of Holiness Company:

Rentals receivable were P96,000 and P124,000 for 2013 and 2014, respectively; Unearned rentals were P320,000 and P240,000
for 2013 and 2014, respectively.

During 2014, Holiness received P800,000 cash from tenants.

What amount of rental revenue should Holiness record for 2014?

21. To maintain sufficient operating cash, Infantry Company frequently borrows from a bank. Below is the summary of loans
granted to Infantry with 12% interest rate. The principal and the related interest are payable at maturity and infantry was
able to repay the loans on scheduled maturity date:
Date of Loan Amount Maturity Date Term of Loan
Nov. 1, 2013 P300,000 Oct. 31, 2014 1 year
Feb. 1, 2014 900,000 July 31, 2014 6 months
May 1, 2014 480,000 Jan. 31, 2015 9 months

Infantry records interest expense when the loans are repaid. Accordingly, interest expense of P90,000 was recorded in 2014. If
no correction is made, by what amount would 2014 interest expense be understated?

22. Under Lim Company’s accounting system, all insurance premiums are paid are debited to prepaid insurance. For interim
financial reports, Lim makes monthly estimated charges to insurance expense with credits to prepaid insurance.

Prepaid insurance on 01/01/12 210,000

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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

Charges to insurance expense during 2012

(including a year-end adjustment of 35,000) 875,000
Prepaid insurance on 12/31/12 245,000

What is the insurance premium paid during 2012?

23. Under the accrual basis, rental income of Esteves Company for the current year is P600,000. Additional information
regarding rental income is as follows:
Unearned rental income, 01/01 50,000
Unearned rental income, 12/31 75,000
Accrued rental income, 01/01 30,000
Accrued rental income, 12/31 40,000
What total amount of cash was received from rental in the current year?

24. Kristine Company’s salaried employees are paid biweekly. Advances made to employees are paid back by payroll
deductions.
12/31/2011 12/31/12
Employee advances 240,000 360,000
Accrued salaries payable 400,000 ?
Salaries expenses during the year 4,200,000
Salaries paid during the year (gross) 3,900,000

On December 31, 2012, what amount should be reported as accrued salaries payable?

25. Groom Company’s professional fees expense account had a balance of P164,000 on December 31, 2014 before considering
year-end adjustments relating to the following:

Consultants were hired for a special project at a total fee not to exceed P130,000. Groom has recorded P110,000 of this fee
based on billings for work performed in 2014.

The attorney’s letter requested by the auditors dated January 310, 2014 indicated that legal fees of P12,000 were billed on
January 15, 2015 for work performed in November 2014 and unbilled fees for December 2014 were P14,000.

What amount of professional fees expense should Groom report for the year ended December 31, 2014 profit or loss?

26. On January 1 2009, the statement of financial position of Racel company showed total assets of P5 000 000, total liabilities
of P2 000 000 and contributed capital of P2 000 000. During the current year the corporation issued share capital of P500 000
par value at a premium of P300 000. Dividend of P250 000 was paid on December 31, 2009. The statement of financial position
on December 31, 2009 showed total assets of P7 500 000 and total liabilities of 3 200 000. What was the net income for the
current year?

27. The December 31, 2009 statement of financial position of Melissa company showed shareholders equity of P5 000 000. The
transactions during the year which affected the equity were:
 An adjustment of retained earnings for 2008 over depreciation 100 000
 Gain on sale of treasury shares 300 000
 Dividend declared, of which P400 000 was paid 600 000
 Net income for 2009 800 000

The share capital balance of P3 000 000 remained unchanged during the year. What was the retained earnings balance on
January 1, 2009?

28. Sunshine company had a total assets of P4 000 000 and shareholders’ equity of P2 080 000 at the beginning of the year.
During the year, assets increased by P520 000 and liabilities decreased by P820 000. What was the shareholders equity at
the end of the year?

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 UNIVERSITY OF NUEVA CACERES
City of Naga
COLLEGE OF BUSINESS AND ACCOUNTANCY
Comprehensive Accounting A/Y 2018-2019

FINANCIAL ACCOUNTING AND REPORTING

JSD

29. Presented below are changes in all the accounts balances of Camadillo Company for the current year, except for retained
earnings.
Increase
(Decrease)
Cash 790 000
Accounts receivable, net 240 000
Inventory 1 270 000
Investment (470 000)
Accounts payable (380 000)
Bonds payable 820 000
Share capital 1 250 000
Share premium 130 000

There were no entries in the retained earnings account except for net income and a dividend declaration of P190 000 which
was paid in the current year. What was the net income for the current year?

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