QUARTER

FUNDAMENTALS
Statement 1OF
– MODULE 2 Income
ACCOUNTANCY,
of Comprehensive
BUSINESS AND MANAGEMENT 2
(SCI)

Senior High School

 Department of Education ● Republic of the Philippines
Fundamentals of Accountancy, Business and Management 2 - Senior High
School
Alternative Delivery Mode
First Edition, 2020

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Writer : Glenn S. Manlupig

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DRAFT

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ii
Introductory Message

Dear Teachers and Learners! The writer welcomes you all to this module for the
subject Fundamentals of Accountancy, Business and Management 2 in the ABM Strand of
Senior High School. The discussion focussed on the preparation of financial statements and
its analyses to determine the profitability, liquidity and solvency of the business.
As your partner in learning, I hope that you will not miss out every detail that the
writer would like you to learn in this material. Do enjoy as there are challenging and
interesting activities inside this learning modules. Congratulations in advance for this will
make you the master of your own learning.
Ops! you wait for a while, for an easy use of this material take note of some few
reminders
1. Take your time to read every detail that this module contains.
2. This material contains Module 1 and Module 2 and each of which is provided
with activities/tests that will surely lead you to learn.
3. Here are the Icons used as your guide in every part of the lesson.

Icons of this Module

What I Need to This part contains learning objectives
DRAFT

that are set for you to learn as you go

Know along the module.
This is an assessment as to your level
of knowledge to the subject matter at
What I know
hand, meant specifically to gauge prior
related knowledge.
This part connects previous lesson with
What’s In that of the current one.

This is an introduction of the new lesson

What’s New through various activities before it will
be presented to you
This is a discussion of the activities as a
What is It way to deepen your discovery and
understanding of the concept.
This is a follow-up activity that is
What’s More intended for you to practice further in
order to master the competencies.
What I Have This activity is designed to process
what you have learned from the lesson
Learned
This is a task that is designed to
showcase your skills and knowledge
What I can do
gained, and applied into real-life
concerns and situations.

iii
 4. Please do follow the directions given per activity so your experience to the use
of this material will be meaningful and fruitful.
5. Answer all the tests in this material.
6. As a courtesy to the future users, PLEASE DO NOT WRITE ANYTHING ON
ANY PART OF THIS MODULE. Write your answer/s on a separate sheet of
paper, notebook, workbook or whichever is specified by your facilitator

Special Reminders for you learners;

1. Answer every activity intelligently and diligently.
2. Write your answer as directed by your facilitator.
3. Feel free to approach or communicate your teacher/facilitator whenever you
need help.
4. Don’t forget to put a smiley face if you finish the activity within the allotted
time.

DRAFT

iv
 Table of Contents

Page
What This Module is About………………………………………………….. ii
Icons of this Module………………………………………………………….. iii
MODULE 2 Statement of Comprehensive Income…………… 1

LESSON 2 Statement of Comprehensive Income…………. 1

Activity 1.2.1 Prepare a Personal SCI…………………………….. 4

Lesson 2.1 Nature of Statement of Comprehensive Income

And Key Features…………………………………… 5

Lesson 2.2 Approaches in Making SCI ……………………….. 6

Lesson 2.3 Steps in Preparing SCI using Single-Step……… 7

Lesson 2.4 Steps in Preparing SCI using Multi-Step...……… 8

Activity
1.2.2 Classify Me……………………………………………. 10
1.2.3 Tell Me The Truth……………………………………..
DRAFT

11
1.2.4 Solving the Problem Case #1………………………. 12
1.2.5 Solving the Problem Case #2………………………. 13
1.2.6 Choosing the Right One ……………………………. 14

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 2
Less
on Statement of Comprehensive Income (SCI)

What I Need To Know

This lesson aims to teach you the elements and details of the Statement of
Comprehensive Income (SCI) which reports the revenue, expenses, and income/loss
for a particular period. This lesson also aims to teach you the different items for a
service business and merchandising business.

At the end of this lesson, you are expected to identify the elements of the
Statement of Comprehensive Income and describe each of these items for a service
business and merchandising business. You are going to prepare a Statement of
Comprehensive Income (SCI) for a service business using the single-step approach
and prepare a Statement of Comprehensive Income for a merchandising business
using the multiple approach.

What I Know

Directions. Read and analyze each item carefully. Write the letter corresponding to the best
answer on your answer sheet. 1 point each.
1. This is a financial statement that informs the reader about the “performance”
and activities of the company for a certain period.
A. Statement of Comprehensive Income
B. Statement of Financial Position
C. Statement of Changes in Equity
D. Statement of Cash Flow

2. This is typically the date of the statement of comprehensive income?

A. “As of December 31, 2019”
B. “For the period ended December 31, 2019”
C. Either A or B
D. None of the above

3. Which of the following is an element of a Statement of Comprehensive

Income?
A. Sales
B. Accounts Payable
C. Notes Receivable
D. Capital

1
4. Which of the following is an element of a Statement of Comprehensive
Income?
A. Notes Payable
B. Bonds Payable
C. Service Fee
D. Capital

5. Which of the following is an element of a Statement of Comprehensive

Income?
A. Note Payable
B. Interest Expense
C. Interest Receivable
D. Bonds Payable

6. Which of the following is an element of a Statement of Comprehensive

Income?
A. Interest Payable
B. Interest Expense
C. Cash
D. Prepaid Rent

7. Which of the following is an element of a Statement of Comprehensive

Income?
A. Prepaid Insurance
B. Gross Profit
C. Furniture and Fixture
D. Equipment

8. Which of the following is only ancillary to the entity’s operation?

A. Professional fees charged by an auditing firm
B. Sales Revenue earned by a convenience store
C. Sales Revenue earned by a drug store
D. Gain on Sale of land

9. Which of the following is classified as selling expenses?

A. Salaries of the president
B. Salaries of sales executives
C. Depreciation of administration building
D. Depreciation of office equipment

10. Which of the following is the correct gross profit formula?

A. Sales + Cost of Sales = Gross Profit
B. Sales + Gross Profit = Cost of Sales
C. Sales – Gross Profit = Cost of Sales
D. None of the above

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 What’s In

The end product or output of accounting (financial accounting, to be specific)

is useful financial information. This useful financial information is the “story” that
accounting tells to the interested users. Useful financial information helps the owner
to answer the question, “Should I invest more cash in the business?

Creditors are also guided by this information in answering the question,

“Should we lend more money to the business?”

Financial information is contained and communicated through the financial

statements. Financial statements are like chapters of a novel, telling different stories
of an interrelated subject. Specially, financial statements are organized depictions of
the events that happened in a business. A complete set of financial statements are
composed of the following (IASB 2011):
1. Statement of Financial Position or Balance Sheet
2. Statement of Comprehensive Income or Income Statement
3. Statement of Changes in Equity
4. Statement of Cash Flow

What’s New

To achieve the objectives of this lesson, you must remember to do the following:
 Read the lessons carefully.
 Follow all directions and given instructions.
 Answer all given tests and activities.
 Learn to familiarize the following terms:

TERM DEFINITION

Statement of Comprehensive Income Also known as the income statement.

Contains the results of the company’s
operations for a specific period of time
which is called net income if it is a net
positive result while a net loss if it is a net
negative result. This can be prepared for a
month, a quarter or a year. (Haddock, Price,
& Farina, 2012)

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Temporary Accounts Also known as nominal accounts are the
accounts found under the SCI. They are
called such because at the end of the
accounting period, balances under these
accounts are transferred to the capital
account, thus having only temporary
amounts and resulting to zero beginning
balances at the beginning of the following
year. (Haddock, Price, & Farina,
2012)Examples of temporary accounts
include revenues, sales, utilities expense,
supplies expense, salaries expense,
depreciation expense, interest expense
among others.

Activity 1.2.1. Prepare a Personal SCI:

1. Get a piece of paper.

2. Write your monthly allowance (computed by daily allowance x number of
days in a month)
3. Write the amount you spend on food, transportation, phone load, etc.
(make it monthly to match your allowance)
4. Deduct the amount you spend from the amount of your allowance
5. Associate allowance with revenue and spending with expense with the net
amount as net income.

Processing Questions:
1. How much is the snet amount?
2. Do you have greater revenue than your expenses? Or vice versa?
3. There might be some cases your computation is zero or even
negative. This means that your expenses are higher than your
income/revenue.
4. A business can still earn even without having cash and can still lose
even with a full bank account. You will understand these concepts
as you go through with the lesson.

Reflect on the importance of having a personal statement of comprehensive income.

4
 What Is It

Lesson 2.1 Nature of Statement of Comprehensive Income

The Statement of Comprehensive Income informs the reader about the

“performance” and activities of the company for a certain period (e.g. for the period
ended December 31, 2019). It generally contains the revenues and expenses
incurred by an entity for the specified period.

A Statement of Comprehensive Income is conventionally compared to a

running video because it presents an entity’s business activities from the start to the
end of a period.

Below are the key features of a statement of comprehensive income.

Key Features of Statement of Comprehensive Income (Income Statement)

1. The Heading
The statement of comprehensive income is a financial report. As a
financial report, it must be properly identified and dated. The appropriate title
of the statement will enable the user to differentiate the statement of
comprehensive income from the other financial reports issued by the entity.
The heading includes the Name of the Entity, the Title of the Report (i.e.,
Statement of Comprehensive Income, and the period it covers (i.e., For the
period ended December 31, 2019)

2. Revenues
Revenues arise in the course of the ordinary activities of an entity and
are referred to by a variety of different names including sales, fees, interest,
dividend, royalties, and rent (IASB 2010).
Revenues are the first line item in the statement of comprehensive
income. Smaller and less complex entities will have one or two sources of
revenues. Larger and more complex entities, on the other hand, will have
multiple sources of revenues, recorded when earned.

3. Expenses
Expenses arising in the course of the ordinary activities of the entity
include, for example, cost of sales, wages, and depreciation. They usually
take the form of an outflow or depletion of assets such as cash and cash
equivalent, inventory, property, plant and equipment.
Classifying expenses for merchandizing concern is more complex than
in a service concern. For a merchandizing concern, the expenses are
classified as cost of sales, selling expenses, and administrative (operating)
expenses.

5
 The cost of sales is the amount paid or payable by the business entity
to its supplier for the merchandize sold to the business entity’s customers.
Cost of sales will take a general formula as seen below:

Beginning Inventory
Add: Net Purchases
Total Goods Available for Sale
Less: Ending Inventory
Cost of Sales

Net purchases for the year are the total amount paid or payable to
suppliers for the period. Net purchases follow a formula as shown below:

Gross Purchases
Less: Purchase Discounts
Purchase Returns
Add: Freight-In
Net Purchases

4. Gain and Losses

Gains represent other items that meet the definition of income and may
or may not, arise in the course of the ordinary activities of an entity. To
reiterate, gains are incidental to the operation of a business. For example, if a
law firm sells its office printer for P 5,000.00 when the carrying amount of the
printer is P 4,000.00, a gain amounting to P 1,000.00 must be recorded.
Losses, on the other hand, represent other items that meet the
definition of expense and may or may not arise in the course of the ordinary
activities of the entity.

5. Other Items
Other items included in the computation of the total comprehensive
income are taxes and items of other comprehensive income. Income tax is the
sum of money payable to the government.

Lesson 2.2. Two Approaches in Making Statement of Comprehensive Income:

1. Single-step – Called single-step because all revenues are listed down in

one section while all expenses are listed in another. Net income is
computed using a “single-step” which is Total Revenues minus Total
Expenses. (Haddock, Price, & Farina, 2012)
2. Multi-step – Called multi-step because there are several steps needed in
order to arrive at the company’s net income. (Haddock, Price, & Farina,
2012)

The two are only formats and will yield the same amount of net
income/loss.
The single-step SCI is more commonly used by service companies while
multi-step format is more commonly used by merchandising companies

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Sample Format of Statement of Comprehensive Income:

LEARNING IS FUN COMPANY

Statement of Comprehensive Income Heading
For the period ended December 31, 2019
Sales Revenue P 100,000.00 Revenue
Less: Expenses
Salaries Expense 40,000.00
Rent Expense 20,000.00 Expenses
Depreciation 10,000.00
Utilities 5,000.00
Miscellaneous Expense 1,000.00 76,000.00
Net Income P 24,000.00 Net income/loss

Figure 2.1 Sample Format of Statement of Comprehensive Income using a Single-

Step Approach. (This is commonly used in Service Concern Type of Business)

Lesson 2.3. Steps in Preparing a Statement of Comprehensive Income using

Single-Step Approach

1. Draft the Appropriate Title

The appropriate title for the for Learning is Fun Company as shown above is;
Learning is Fun Company
Statement of Comprehensive Income
For the period ended December 31, 2019

2. Determine Total Revenue from the Trial Balances

Refer to the example above, the total revenue which came from the total sales
is P 100,000.00.
Sales Revenue P 100,000.00

3. Determine total Operating Expenses

Based on the example above, our expenses can be determined as follows;
Salaries Expense 40,000.00
Rent Expense 20,000.00
Depreciation 10,000.00
Utilities 5,000.00
Miscellaneous Expense 1,000.00

4. Determine the effect of other items

Based on our worksheet, there are no items pertaining to gains, losses, and
other comprehensive income. Income taxes are also ignored in the case.
Having noticed such items, net income can now be determined by deducting
Sales Revenue from Operating Expenses as shown on the example above.

7
 Sample Format of Statement of Comprehensive Income using a Multi-Step
Approach.

ABM TRADING
STATEMENT OF COMPREHENSIVE INCOME Heading
FOR THE PERIOD ENDED DECEMBER 31, 2019
Sales 129,000
Less: Sales Returns & Allowances 7,000 Revenue
Sales Discounts 3,000 10,000
Net Sales 119,000
Less: Cost of Sales
Merchandise Inventory, Beginning 80,000
Add: Purchases 50,000
Freight In 2,000
Total Purchases 52,000 Cost of Sales
Less: Purchase Returns & Allowances 4,500
Purchase Discounts 5,000 9,500 42,500
Total Goods Available for Sale 122,500
Less: Merchandise inventory, End 50,000 72,500
Gross Profit 46,500
Less: Administrative and Operating Expenses
Salaries 14,500
Freight Out 3,500
Insurance Expense 500
Interest Expense 580
Cost of Sales
Bad Debts 7,400
Depreciation-Store Equipment 10,500
Depreciation-Store Furniture 7,200 44,180
Net Income 2,320
Add: Other Income
Commission Income 7,000 Cost of Sales
Interest Income 345 7,345
Net Income for the Period 9,665
======

Figure 2.2 Sample Statement of Comprehensive Income using Multiple-Step Approach.

Lesson 2.4. Steps in Preparing SCI Using Multiple-Step Approach:

1. Determine the revenues.

Since the entity is a merchandising concern, its revenue will come from sales.
The revenue to be presented in the statement of comprehensive income must
be net of the discounts, return and allowances. Sales discounts and returns
and allowances are called contra revenue because it is on the opposite side
of the sales account. The sales account is on the credit side while the
reductions to sales accounts are on the debit side. This is “contrary” to the
normal balance of the sales or revenue accounts. (Haddock, Price, & Farina,
2012)
Sales returns – This account is debited in order to record returns of customers
or allowances for such returns.(Haddock, Price, & Farina, 2012) Sales returns
occur when customers return their products for reasons such as but not
limited to defects or change of preference.
Sales discount – This is where discounts given to customers who pay early
are recorded. (Haddock, Price, & Farina, 2012) also known as cash discount.
This is different from trade discounts which are given when customers buy in
bulk. Sales discount is awarded to customers who pay earlier or before the
deadline. (Sales less Sales Discounts and Returns is equal to Net Sales)

8
2. Determine the Net Purchases, Cost of Sales and Gross Profit
This account represents the actual cost of merchandise that the company was
able to sell during the year. (Haddock, Price, & Farina, 2012).

Beginning inventory – This is the amount of inventory at the beginning of the

accounting period. This is also the amount of ending inventory from the
previous period.
Net Cost of Purchases = Purchases + Freight In
Net Purchases = Purchases – (Purchase discount and purchase returns)

Purchases – amount of goods bought during the current accounting period.

Contra Purchases –An account that is credited being “contrary” to the normal
balance of Purchases account.
Purchase discount – Account used to record early payments by the
company to the suppliers of merchandise. (Haddock, Price, & Farina, 2012)
This is how buyers see a sales discount given to them by a supplier.
Purchase returns and allowances – Account used to record
merchandise returned by the company to their suppliers. (Haddock, Price, &
Farina,2012) This is how buyers see a sales return recorded by their supplier.

Freight In – This account is used to record transportation costs of

merchandise purchased by the company. (Haddock, Price, & Farina, 2012)
Note that there is a difference between freight-in and freight-out. Freight-in
denotes charges pertaining to the receipts or purchase of goods. Freight-in is
accounted for as an addition to purchases. Freight-out, on the other hand,
pertains to the delivery of cost of goods sold. Freight-out is treated as a selling
expense.

Add Beginning inventory and Net cost of Purchases to get Cost of Goods
Available for Sale

Ending Inventory – amount of inventory presented in the Statement of

Financial Position. Total cost of inventory unsold at the end of the accounting
cycle.

Sales less Cost of Goods Sold is Gross Profit

3. Determine the Administrative and Operating Expenses

General and Administrative Expenses –These expenses are not
directly related to the merchandising function of the company but are
necessary for the business to operate effectively. (Haddock, Price, & Farina,
2012) Example of general and administrative expenses include utilities for
home office, salaries of admin personnel
Selling or Operating Expenses – These expenses are those that are
directly related to the main purpose of a merchandising business: the sale and
delivery of merchandise. This does not include the cost of goods sold and
contra revenue accounts. (Haddock, Price, & Farina, 2012) Examples of
selling expenses include sales commissions, delivery expenses, and
advertising expenses.

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 4. Determine the Net Income
Gross Profit less General and Administrative Expenses less Selling Expenses
is Net Income for a positive result while Net Loss for a negative result.

What’s More

Activity 1.2.2 Classify Me!

Instruction: Identify each element or account title if it can be found on a

service or merchandising business. Complete the table by putting a ( ) check mark
or (X) cross mark in the corresponding columns.

Account Titles Service Business Merchandising Business

Ex. Professional Fees  X
Sales
Consulting Revenue
Purchases
Cost of Sales
Inventory Beginning
Referral Revenue
Freight-In
Purchase Returns & Allowances
Advertising Revenue
Service Revenue

Reflection:
Think of all elements or accounts in the Statement of Comprehensive Income
for service and merchandising business, list it down and explain.

10
 What I Have Learned

Activity 1.2.3 Tell Me the Truth

Instruction: True or False. Write the word “True” if the statement is correct and
“False” if it is incorrect. Write the answer on the space provided before each number.

________ 1. Income statement shows the profitability of the business.

________ 2. It is customary for service organization industries operated as sole

proprietors to omit the cost of service.

________ 3. Freight-in charges pertain to the receipt or purchase of goods.

________ 4. Income statement reflects the performance of an entity for a specified

time period.

________ 5. Freight-out is treated as an administrative expense.

________ 6. The income statement heading specifies a point of time, indicating “as
of or “as at”.

________ 7. Revenue is the amount earned by a business in its main operating

activities.

________ 8. When a company disposes equipment and receives an amount more

than the carrying value of assets in the accounting records, the company should
record or report gain.

________ 9. The multistep income statement shows gross profit in its presentation.

________10. The single step income statement format segregates the operating
revenues and expenses from the non-operating revenues.

________11. Net sales minus the cost of goods sold equals to gross profit.

________12. Gross profit minus operating expenses is best defined as net sales.

________13. Gross profit is computed as the difference between the net sales and
cost of sales.
________14. The statement of comprehensive income informs the reader about the
“performance” and activities of the company for a certain period.

________15. Salary of personnel in the production department is considered to be

operating expenses.

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 What I Can Do

Activity 1.2.4. Solving the Problem

Case #1. Sindayen Engineering Consultants

The following are the accounts of Sindayen Engineering Consultants for

December 31, 2019.

Professional Fees 625,000.00

Salaries Expense (62,500.00)
Supplies Expense (93,750.00)
Depreciation Expense (75,000.00)
Utilities Expense (50,000.00)
Insurance Expense (25,000.00)
Rent Expense (112,500.00)
Loss on sale of equipment (50,000.00)

You are employed by the entity as its bookkeeper in its first year of operation. You
will prepare the necessary financial statement for the current year;
Instructions:

1. Determine the net income.

2. Prepare a Statement of Comprehensive Income using Single-Step
Approach.

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Activity 1.2.5. Solving the Problem

Case #2. Tee Shirts Company.

Refer to the partial trial balance of Tee Shirts Company below;

TEE SHIRTS COMPANY

TRIAL BALANCE
DECEMBER 31, 2019

ACCOUNTS DEBIT CREDIT

Inventory, beginning 2,000,000.00
Sales 15,000,000.00
Sales Returns and Allowances 10,000.00
Sales Discount 120,000.00
Purchases 8,000,000.00
Freight-in 200,000.00
Freight-out 500,000.00
Purchase Discounts 100,000.00
Purchase Returns and Allowances 10,000.00
Salary Expense 1,000,000.00
Utilities Expense 240,000.00
Permit & Licenses 10,000.00
Repair and Maintenance 100,000.00
Depreciation 120,000.00
Inventory, end 1,750,000.00

You are employed by the company as its bookkeeper in its first year of operations.
You will prepare the necessary financial statement for the current year.
Instructions:
1. Compute for the net sales for the year.
2. Compute for the cost of sale for the year.
3. Compute for the gross profit for the year.
4. Compute for the income for the year.
5. Prepare a Statement of Comprehensive Income using a Multi-step
Approach.

13
Activity 1.2.6. Choosing the Right One

Read and carefully examine the statements and choose the best answer.

1. Select the most appropriate description of the statement of comprehensive

income’s key features.
A. A statement of comprehensive income is like a picture that depicts a static
image of an entity.
B. A statement of comprehensive income is like a moving video that depicts a
moving scene of an entity.
C. A statement of comprehensive income contains assets, liabilities, and
equity.
D. A statement of comprehensive income is dated “As of December 31, 2019”

2. Which is an appropriate date for a statement of comprehensive income?

A. “As of December 31, 2019”
B. “For the period ended December 31, 2019”
C. Either A or B
D. Neither A or B

3. Which of the following is an element of a statement of comprehensive

income?
A. Cash
B. Receivables
C. Revenues
D. Interest Receivables

4. Which of the following is an element of a statement of comprehensive

income?
A. Cash equivalents
B. Capital
C. Drawing
D. Professional fees

5. Which of the following is an element of a statement of comprehensive

income?
A. Note Payable
B. Note receivable
C. Interest Receivable
D. Interest Expense

6. Which of the following is an element of a statement of comprehensive

income?
A. Interest Payable
B. Interest Expense
C. Rent Expense
D. Prepaid Rent

14
 7. Which of the following is an element of a statement of comprehensive
income?
A. Account Payable
B. Interest Payable
C. Interest Receivable
D. Gross Profit

8. Which of the following is only ancillary to the entity’s operation?

A. Professional fees charged by a law firm
B. Sales revenue earned by a variety store
C. Sales revenue earned by a department store
D. Gain on sale of property, plant and equipment

9. Which of the following is classified as selling expenses?

A. Salaries of corporate executive
B. Salaries of salesman
C. Depreciation of corporate headquarters
D. Depreciation of automobile

10. Which of the following is the correct gross profit formula?

A. Sales + Cost of Sales = Gross Profit
B. Sales + Gross Profit = Cost of Sales
C. Sales – Gross Profit = Cost of Sales
D. None of the above.

Congratulations! You have just finished Lesson 2 of this module. Let’s recap!

The single-step format uses only one subtraction function to calculate net
income; net income = (revenue + gains) – (expenses + losses). The heading of the
statement of comprehensive income or income statement includes the name of the
company which appears first, followed by the title “Statement of Comprehensive
Income”. The third line tells the reader the time interval reported on the profit and
loss statement. Since income statements can be prepared for any period of time, you
must inform the reader of the precise period of time being covered.

An alternative to the single-step income statement is the multiple-step income

statement because it uses multiple subtractions in computing the net income shown
on the bottom line. The multiple-step profit and loss statement segregates the
operating revenues and operating expenses from the non-operating revenues, non-
operating expenses, gains and losses. The multiple-step statement of
comprehensive income also shows the gross profit (net sales minus the cost of
goods sold).

15
 Answer Key

What I Know / Pre-test & Post Test

1. A
2. B
3. A
4. C
5. B
6. B
7. B
8. D
9. B
10. C

Activity 1.2.1 Prepare a Personal SCI

 Answer may vary

What’s More / Activity 1.2.2 – Classify Me

Account Titles Service Business Merchandising Business

Ex. Professional Fees  X
Sales X 
Consulting Revenue  X
Purchases X 
Cost of Sales X 
Inventory Beginning X 
Referral Revenue  X
Freight-In X 
Purchase Returns & Allowances X 
Advertising Revenue  X
Service Revenue  X

What I Have Learned / Activity 1.2.3 – Tell Me the Truth

1. True 11. True
2. True 12. False
3. True 13. True
4. True 14. True
5. False 15. True
6. False
7. True
8. True
9. True
10. False

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What I Can Do / Activity 1.2.4 – Solving the Problem

Case #1. Sindayen Engineering Consultants

1. Determine the net income.

P 156,250.00

2. Prepare a Statement of Comprehensive Income using Single-Step

Approach.

Sindayen Engineering Consultants

Statement of Comprehensive Income
For the period ended December 31, 2019
Professional Fees P 625,000.00
Less: Expenses
Salaries Expense 62,500.00
Supplies Expense 93,750.00
Depreciation 75,000.00
Utilities 50,000.00
Insurance Expense 25,000.00
Rent Expense 112,500.00 418,750.00
Total Income P 206,250.00
Less: Loss on sale of equip. ( 50,000.00)
Net Income P 156,250.00

Activity 1.2.5. Solving the Problem

Case #2. Tee Shirts Company.

Compute for the net sales for the year.

P 14,870,000.00

1. Compute for the cost of sale for the year.

P 8,340,000.00

2. Compute for the gross profit for the year.

P 6,530,000.00

3. Compute for the income for the year.

P 4,560,000.00

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 4. Prepare a Statement of Comprehensive Income using a Multi-step
Approach.

TEE SHIRTS COMPANY

STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED DECEMBER 31, 2019
Sales 15,000,000.00
Less: Sales Returns & Allowances 10,000.00
Sales Discounts 120,000.00 130,000.00
Net Sales 14,870,000.00
Less: Cost of Sales
Merchandise Inventory, Beginning 2,000,000.00
Add: Purchases 8,000,000.00
Freight In 200,000.00
Total Purchases 8,200,000.00
Less: Purchase Returns 10,000.00
Purchase Discounts 100,000.00 110,000.00 8,090,000.00
Total Goods Available for Sale 10,090,000.00
Less: Merchandise inventory, End 1,750,000.00 8,340,000.00
Gross Profit 6,530,000.00
Less: Administrative and Operating
Expenses
Freight Out 500,000.00
Salaries 1,000,000.00
Utilities Expense 240,000.00
Permit & Licenses 10,000.00
Repair and Maintenance 100,000.00
Depreciation 120,000.00 1,970,000.00
Net Income 4,560,000.00

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References

Arganda, A. M. (2016). Fundamentals of Accounting Bookkeeping 1. Anvil

Publishing, Inc.
Josefina L. Beticon, J. C. (2017). Fundamentals of Accountancy, Business and
Management 2 - Teacher's Manual. Vibal Group. Inc.
Reyes, V. D. (2017). Fundamentals of Accountancy, Business and Management 2.
GIC Enterprises & Co., Inc.
Salazar, D. R. (2017). Fundamentals of Accountancy, Business and Management 2.
Rex Bookstore.

Additional References:

Teacher’s Guide in Fundamentals of Accountancy, Business and Management 2

https://edge.pse.com.ph/openDiscViewer.do?
edge_no=5b3feb584ad68ec41db82e377ee70f3b)

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