ABC Company prepared the following income statement for the year 2020: Sales P6,000,000 Cost of goods sold (2,800,000) Gross Income P3,200,000 Gain on sale of equipment 100,000 Total Income P3,300,000 Operating expenses (500,000) Casualty loss (300,000) Income before tax P 2,500,000 Income tax- 30% 750,000 Net Income P1,750,000 Third quarter sales were 30% of total sales For interim reporting purposes, a gross profit rate of 40% can be justified Variable operating expenses are allocated in the same proportion as sales Fixed operating expenses are all allocated based on the expiration of time Of the total operating expenses, P400,000 relate to variable expenses and P100,000 relate to fixed expenses The equipment was sold on June 1 The casualty loss occurred on September 1 What amount should be reported as income before tax for the third quarter ended September 30? A. P500,000 B. P275,000 C.P375,000 D. P300,000
ABC Company prepared the following income statement for the year 2020:
Sales P6,000,000
Cost of goods sold (2,800,000)
Gross Income P3,200,000
Gain on sale of equipment 100,000
Total Income P3,300,000
Operating expenses (500,000)
Casualty loss (300,000)
Income before tax P 2,500,000
Income tax- 30% 750,000
Net Income P1,750,000
- Third quarter sales were 30% of total sales
- For interim reporting purposes, a gross profit rate of 40% can be justified
- Variable operating expenses are allocated in the same proportion as sales
- Fixed operating expenses are all allocated based on the expiration of time
- Of the total operating expenses, P400,000 relate to variable expenses and P100,000 relate to fixed expenses
- The equipment was sold on June 1
- The casualty loss occurred on September 1
What amount should be reported as income before tax for the third quarter ended September 30?
A. P500,000
B. P275,000
C.P375,000
D. P300,000
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
