This study source was downloaded by 100000842459243 from CourseHero com on 03 29 2022 11 04 31 GMT 05 00 https www coursehero com file 76728116 E2 SoCI Problemspdf PAGE 1 2 Exercises FINANCIAL ACCOUNTING AND REPORTING STATEMENT OF COMPREHENSIVE INCOME Learning Objectives Problem 1 Determining correct items to be included in profit or loss Problem 2 Income from continuing operations distinguished from discontinued operations Problem 3 Classifying expenses according to function Problem 4 Determining profit using the nature of expense format Problem 5 Cost of goods sold computed using increases and decreases in inventory accounts Problem 6 Work back problem by determining cost of goods sold using the gross profit method Problem 7 Determining profit and loss and comprehensive income Problem 8 Comprehensive problem on the two major classifications of other comprehensive income 1 Francis Company s shareholders equity on January 1 2019 was at P40 000 000 Francis Company did not issue any shares and did not acquire any treasury shares during the year The company reported a net income of P10 000 000 for the year ended December 31 2019 The auditor raised questions about the following amounts that had been included in the net income Loss from expropriation of property net 1 500 000 Unrealized gain on the increase in value of FA at FVOCI 500 000 Adjustment of profit of prior year net debit 4 500 000 Accumulated forex translation loss 2 000 000 Revaluation surplus realized 1 000 000 Loss on write off of inventory due to a government prohibition net 3 500 000 The loss from expropriation was unusual in occurrence in Francis s line of business Francis Company s 2019 income statement should report net income at a 15 000 000 c 15 500 000 b 13 000 000 d 16 000 000 2 Hanson Company had the following gains during 2019 which was considered to be unusual and infrequent in Hanson s line of business Gain on the extinguishments of long term bonds payable 500 000 Foreign currency transaction gain due to major devaluation 600 000 Gain from the expropriation of asset 800 000 Loss from the disposal of assets of discontinued operation 1 000 000 What total amount of gains should Hanson include as component of income from continuing operations a 1 400 000 c 2 900 000 b 1 900 000 d 2 100 000 3 Stallion Corporation separates operating expenses in two categories selling and general and administrative expenses The adjusted trial balance at December 31 2019 included the following expenses and loss accounts Interest 1 400 000 Accounting and audit Fees 500 000 Advertising 800 000 Freight out 1 600 000 Product development 350 000 Loss on sale of long term investment 100 000 Officers salaries 900 000 Depreciation on delivery equipment 400 000 Rent for office space 1 200 000 Sales salaries and commissions 750 000 One half of the rented premises is occupied by the sales department The entity s total selling expenses for 2019 are a 4 750 000 c 5 100 000 b 3 950 000 d 4 150 000 4 The general ledger trial balance of Michael Company includes the following accounts on December 31 2019 Sales revenue 9 750 000 Interest income 200 000 Share of profit of associate 150 000 Other income 50 000 Decrease in inventory of finished goods 250 000 Raw materials and consumables used 3 500 000 Employee benefit expense 1 500 000 Translation loss of foreign operations 300 000 Depreciation 450 000 Impairment loss on property 800 000 Finance costs 350 000 Other expenses 450 000 Income tax expense 750 000 What is the profit for the year ended December 31 2019 a 2 100 000 c 2 600 000 b 1 800 000 d 6 000 000 This study source was downloaded by 100000842459243 from CourseHero com on 03 29 2022 11 04 31 GMT 05 00 https www coursehero com file 76728116 E2 SoCI Problemspdf PAGE 2 2 Exercises 5 The following information was taken from Ozz Company s accounting records for the year ended December 31 2019 Sales Decrease in goods in process inventory 10 000 000 200 000 Decrease in raw materials inventory 350 000 Increase in finished goods inventory 500 000 Raw materials purchased 2 100 000 Direct labor payroll 1 000 000 Factory overhead 800 000 Freight in 300 000 Freight out 900 000 General and administrative expenses 1 600 000 How much is Ozz Company s income before tax a 4 150 000 b 4 000 000 c 3 250 000 d 3 750 000 6 The following information with regard to Brisbane Company s inventory for 2019 is available January 1 December 31 Raw materials 2 000 000 2 500 000 Work in process 5 100 000 4 300 000 Finished goods 6 000 000 4 000 000 The gross profit rate historically is 30 of sales The sales for the year amounted to P25 000 000 Direct labor costs for the year were P6 000 000 and manufacturing overhead has been applied at 60 of direct labor What was Brisbane s raw material purchases in 2019 a 5 600 000 c 7 100 000 b 5 100 000 d 7 600 000 7 The income statement accounts of Gringo Company for the year 2019 included the following Net sales 9 500 000 Cost of goods sold 4 000 000 Distribution cost 600 000 Administrative expenses 1 200 000 Interest expense 700 000 Other expense 400 000 Interest income 200 000 Gain from expropriation 100 000 Investment income 200 000 Income tax 800 000 Income from discontinued operations 600 000 Unrealized gain FA at FVTOCI 1 100 000 Foreign currency translation adjustment loss 200 000 Revaluation surplus 2 500 000 Dividends declared 1 000 000 Investments by shareholders 400 000 Correction of an error debit 3 000 000 1 The 2019 statement of comprehensive income should report income before income taxes at what amount a 3 000 000 b 3 100 000 c 2 300 000 d 3 500 000 2 The 2019 statement of comprehensive income should report income from continuing operations at what amount a 3 200 000 b 3 100 000 c 2 300 000 d 2 900 000 3 The 2019 statement of comprehensive income should report net income at what amount a 3 400 000 b 3 100 000 c 2 300 000 d 2 900 000 4 The 2019 statement of comprehensive income should report comprehensive income at what amount a 5 700 000 b 6 300 000 c 5 900 000 d 6 500 000 This study source was downloaded by 100000842459243 from CourseHero com on 03 29 2022 11 04 31 GMT 05 00 https www coursehero com file 76728116 E2 SoCI Problemspdf Powered by TCPDF www tcpdf org PAGE 3 2 Exercises 8 Mark Company provided the following information for the current year Income from continuing operations 5 000 000 Income from discontinued operation 1 300 000 Unrealized gain on financial asset at FVTPL 2 500 000 Unrealized gain on