Chapter 4 & 5

Intermediate Accounting 3
Statement of
Comprehensive Income
Chapter 4
Statement of Comprehensive Income
Chapter 4
Problem 4-8 (AICPA ADAPTED)
Parker Company reported Operating expenses as distribution and general or administrative.
The Adjusted Trial Balance at the end of the current year included the following expense
accounts:

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

What total amount should be included in Distributions expenses for the current
year?
a. 6,000,000 b. 3,650,000 c. 4,550,000 d. 4,900,000
Statement of Comprehensive Income
Chapter 4
Problem 4-9 (AICPA ADAPATED)
Grim Company incurred the following costs during the current year:

What amount of these costs should be reported as administrative

expense?
A. 2,600,000
B. 3,350,000
C. 5,200,000
D. 4,200,000
Statement of Comprehensive Income
Chapter 4
Problem 4-10 (IAA)
Tanzania Company reported operating expenses other than interest expense for the year at
40% of cost of goods sold but only 20% of sales. Interest Expense is 5% of Sales.
The amount of purchases is 120% of Cost of Goods Sold. Ending Inventory is twice as much
as the beginning Inventory.
The Net Income is P2,100,000. The income tax rate is 30%

1. What amount should be reported as sales for the current year?

a. 10,000,000 c. 18,000,000
b. 15,000,000 d. 12,000,000

2. What amount should be reported as purchases for the current year?

a. 6,000,000 c. 3,000,000
b. 7,200,000 d. 3,600,000
Statement of Comprehensive Income
Chapter 4

Problem 4-11 (PHILCPA Adapted)

Mercury Company showed cost of goods sold of P4,320,000 after the first year of operations.
The total manufacturing cost comprised the following:

Materials used 50%

Direct labor incurred 30%
Manufacturing overhead 20%
Goods in process at year-end amounted to 10% of the total manufacturing cost. Finished
goods at year-end amounted to 20% of the cost of goods manufactured.

What amount should be reported as direct labor cost incurred?

a.1,800,000 c.3,000,000
b.2,400,000 d.5,400,000
Statement of Comprehensive Income
Chapter 4
Problem 4-12 (AICPA Adapted)
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 amount should be reported as cost of goods sold for the current year?
a.9,950,000 b.9,550,000 c.9,250,000 d.9,150,000
Statement of Comprehensive Income
Chapter 4
Problem 4-13 (IAA)
Condo Company reported the following total debits and total credits in selected accounts
after closing entries were posted:
Statement of Comprehensive Income
Chapter 4
Problem 4-13 (IAA)
Condo Company reported the following total debits and total credits in selected accounts
after closing entries were posted:

1. What amount should be reported as cost of goods manufactured?

a. 6,900,000
b. 7,200,000
c. 7,000,000
d. 7,400,000

2. What amount should be reported as cost of goods sold?

a. 6,900,000
b. 7,400,000
c. 7,100,000
d. 7,000,000
Statement of Comprehensive Income
Chapter 4
Problem 4-14 (PHILCPA Adapted)
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
Distribution costs 1,250,000
Sales discount 250,000
The cost of goods sold is six times the distribution costs.

What amount should be reported as gross purchases?

a. 6,500,000 c. 8,000,000
b. 6,700,000 d. 8,200,000
Statement of Comprehensive Income
Chapter 4
Problem 4-15 (PHILCPA Adapted)
Bicolano Company reported 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 at December 31 2,800,000
Gross profit rate on net sales 20%

What amount should be reported as gross sales for the current year?
a. 7,750,000 c. 7,000,000
b. 8,500,000 d.9,125,000
Statement of Comprehensive Income
Chapter 4
Problem 4-16 (AICPA Adapted)
Thorpe Company reported net income of P7,500,000 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 500,000

Gain on early retirement of bonds payable 2,200,000
Debit adjustment of profit of prior year for error 750,000
in depreciation, net of tax effect
Loss from fire 1,400,000

What amount should be reported as adjusted net income for the current year?
a. 6,250,000 c. 8,000.000
b. 9.500,000 d. 8.750.000
Statement of Comprehensive Income
Chapter 4
Problem 4-17 (AICPA Adapted)
Pearl Company reported income before tax of P5,000,000 for the current year. The entity
owned 40% of Cinn's share capital.
The auditor questioned the following amounts that had been included in income before tax:
Equity in earnings of Cinn Company. 1,600,000
Dividend received from Cinn Company. 400,000
Credit adjustment of profit of prior year
for arithmetical error in depreciation. 500,000
Gain on sale of equity investment at FVOCI. 1,000,000

What amount should be reported as income before tax?

a. 4,100.000 c. 4,500,000
b. 4,600,000 d. 3,100,000
Statement of Comprehensive Income
Chapter 4
Problem 4-17 (AICPA Adapted)
Pearl Company reported income before tax of P5,000,000 for the current year. The entity
owned 40% of Cinn's share capital.
The auditor questioned the following amounts that had been included in income before tax:
Equity in earnings of Cinn Company. 1,600,000
Dividend received from Cinn Company. 400,000
Credit adjustment of profit of prior year
for arithmetical error in depreciation. 500,000
Gain on sale of equity investment at FVOCI. 1,000,000

What amount should be reported as income before tax?

a. 4,100.000 c. 4,500,000
b. 4,600,000 d. 3,100,000
Statement of Comprehensive Income
Chapter 4
Problem 4-18 (AICPA Adapted)
Divina Company provided the following information for the
current year:
Income from continuing operations. 4,000,000
Income from discontinued operation. 500,000
Unrealized gain on financial asset -FVPL. 800,000
Unrealized loss on equity investment -FVOCI 1,000,000
Unrealized gain on debt investment -FVOCI. 1,200,000
Unrealized gain on futures contract designated as a
cash flow hedge. 400,000
Translation loss on foreign operation. 200,000
Net remeasurement gain on defined benefit plan. 600,000
Loss on credit risk of a financial liability at FVPL. 300,000
Revaluation surplus during the year. 2,500,000
Statement of Comprehensive Income
Chapter 4
Problem 4-18 (AICPA Adapted)
1. What net amount should be reported as OCl for the
current year?
a. 4,000,000 c. 3,200,000
b. 3,500,000 d. 700,000

2. What net amount in OCI should be reclassified to retained earnings?

a. 1,800,000 c. 3,000,000
b. 1,400,000 d. 1,600,000

3. What amount should be reported as comprehensive

income for the current year?
a. 5,200.000 c. 8,500,000
b. 7,700,000 d. 7,200,000
Statement of Comprehensive Income
Chapter 4
Statement of Comprehensive Income
Chapter 4
Problem 4-19 (AICPA Adapted)
1. What amount should be reported as cost of goods sold?
a. 3,850,000
b. 4,000,000
c. 4,150,000
d. 4,700,000

2. What amount should be reported as total expenses before

income tax?

a. 2,350,000
b. 2,500,000
c. 2,250,000
d. 2,050,000
Statement of Comprehensive Income
Chapter 4
Problem 4-19 (AICPA Adapted)
3.What amount should be reported as net income for the
current year?
a. 2,000,000
b. 2,500,000
c. 1,500,000
d. 2,650,000

4. What amount should be reported as retained earnings On

December 31?
a. 4,000,000
b. 4,500,000
c. 3,500,000
d. 4,650,000
Statement of
Changes in Equity
Chapter 5
Statement of Changes in Equity
Chapter 5
Problem 5-6
United Company reported the following unadjusted current assets and shareholders’ equity
at year-end:
Cash 600,000
Financial assets at fair value, including cost of
P300,000 of United Company shares 1,000,000
Accounts receivable 3.500,000
Inventory 1,500,000
Share capital 5,000,000
Share premium 2,000,000
Retained earnings 500,000
What amount should be reported as total shareholders’ equity at year end?

a. 7,200,000 b.7,500,000 c. 7,800,000 d.5,200,000

Statement of Changes in Equity
Chapter 5
Problem 5-7
Bronze Company provided the following information at year-end:
Share capital 6,000,000
Share premium 3,500,000
Cumulative translation adjustment - debit 2,000,000
Treasury shares, at cost 700,000
Retained earnings 1,500,000
Cumulative unrealized gain on option contract
Designated as cash flow hedge 600,000

What amount should be reported as shareholders’ equity at year end?

a. 9,500,000 c. 7,400,000
b. 8,900,000 d. 7,500,000
Statement of Changes in Equity
Chapter 5
Problem 5-8
Silver company provide the following information at year-end:
Share premium 1,000,000
Accounts payable 1,100,000
Preference share capital, at par 2,000,000
Ordinary share capital, at par 3,000,000
Sales 10,000,000
Total expenses 7,800,000
Treasury shares - ordinary 500,000
Dividends 700,000
Retained earnings - beginning 1,000,000

What amount should be reported as shareholders’ equity at year-end:

a. 8,000,000 b.8,500,000 c. 5,800,000 d.8,700,000
Statement of Changes in Equity
Chapter 5
Problem 5-9
Kalinga company reported the following adjusted account balances at year-end:

Share capital 15,000,000

Share premium 5,000,000
Treasury shares, at cost 2,000,000
Actuarial loss on defined benefit plan 1,000,000
Retained earnings unappropriated 6,000,000
Retained earnings appropriated 3,000,000
Revaluation surplus 4,000,000
Cumulative translation adjustment - credit 1,500,000

What amount should be reported as shareholders’ equity at year-end?

a. 31,500,000 b. 32,500,000 c. 28,500,000 d.25,500,000