Home-based Activity

Lesson 2 – Statement of Comprehensive Income

Prepare your answer in your Columnar Notebook

The following are taken from the records of ABC Company for the year ended December 31, 2021.

Debit Credit
Sales 764,985
Purchase 8,200
Purchase returns and allowances 5,465
Purchases 459,990
Freight-in 9,180
Sales discount 13,300
Sales returns and allowances 5,455
Depreciation expense 25,000
Amortization expense 10,000
Salaries expense 80,000
Utilities expense 55,000
Advertising expense 35,000
Rent expense 60,000
Interest income 5,444
Interest expense 5,677
Gain on sale of PPE 5,465
Bad debts expense ???

Based on actual physical count, inventory balance are as follows:

January 1, 2020 25,455

December 31, 2020 20, 765

Bad debts expense is 4% of net sales. Classify the bad debt expense as a general and administrative
expense.

1. Determine the following:

a. Net sales
b. Net purchases
c. Cost of Goods Sold
d. Bad debts expense
2. Prepare a Single-step SCI without Inventory Adjustment
3. Prepare a Single-step SCI without with Inventory Adjustment
4. Prepare a function of expense SCI (Computation of General and Administrative Expenses and
Selling Expenses). Additional information:
a. Depreciation of 5,000 is for computer equipment used in the administrative office.
b. Amortization is attributed to office leasehold improvements.
c. 40% of salaries are attributed to sales personnel.
d. Utilities for the store represent 35% of utilities expense.
e. Rent for the office space is 20,000.