Assume that you are one of the owners of Pinoy Corporation. Upon reviewing the project income statements as shown in Tables 7.3 and 7.4 you realized that salaries are understated because it only accounts for the 12 months of salary of each employee and does not include the 13th month pay, which is required by law. You also feel that cost of goods sold ought to be computed at 45% instead of 40% of salles revenues. Using a spreadsheet program, revise the projected income statements for the first year and the first three years of the business. Table 7.4. Pinoy Corporation, Projected Income Statement,First Three Years (in thousand pesos)Year 1Year 2Year 3Sales5820100.006402100.007042.2100Less: Cost of goodssold232840.002560.840.002816.8840.00Gross margin4225.32349260.003841.260.0060.00Operating expensesSalaries108016.87113416.1090015.46Rent3605.623605.113606.19 Table 7.3 Pinoy Corporation, Projected Income Statement, First Year by Month (in thousand pesos)JanFebMarAprMayJunJulyAugSepOctNovDecTotal288.0 420.0 480.0 500.0 600.0 600.0Sales120.0192.0480.0 640.0 720.0 780.0 5820.0Less: Cost of48.076.8115.2 168.0 192.0200.0240.0 240.0 192.0 256.0 288.0 312.0 2328.0goods soldGross margin72.0115.2172.8252.0288.0300.0360.0360.0288.0 384.0432.0468.03492.0OperatingexpensesSalaries75.075.075.075.075.075.075.075.075.075.075.075.0900.0Rent30.030.030.030.030.030.030.030.030.030.030.030.0360.0Utilities4.04.04.04.04.04.04.04.04.04.04.04.0480.0Sales15.015.015.015.015.015.015.015.015.015.015.015.0180.0expensesInsurance2.02.02.02.02.02.02.02.02.02.02.02.024.0Depreciation5.05.05.05.05.05.05.05.05.05.05.05.060.0Total operating131.0131.0131.0131.0131.0131.0131.0131.0 131.0 131.0131.0131.01572.0expensesNet profit (loss)(59.0)(15.8)41.8121.0157.0169.0229.0229.0157.0 253.0301.0337.01920.0o o

The income statements are projected to forecast the profit in future years on the basis of…

Answered: Assume that you are one of the owners…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Assume that you are one of the owners of Pinoy Corporation. Upon reviewing the project income statements as shown in Tables 7.3 and 7.4 you realized that salaries are understated because it only accounts for the 12 months of salary of each employee and does not include the 13th month pay, which is required by law. You also feel that cost of goods sold ought to be computed at 45% instead of 40% of salles revenues. Using a spreadsheet program, revise the projected income statements for the first year and the first three years of the business.

Table 7.4. Pinoy Corporation, Projected Income Statement,
First Three Years (in thousand pesos)
Year 1
Year 2
Year 3
Sales
5820
100.00
6402
100.00
7042.2
100
Less: Cost of goods
sold
2328
40.00
2560.8
40.00
2816.88
40.00
Gross margin
4225.32
3492
60.00
3841.2
60.00
60.00
Operating expenses
Salaries
1080
16.87
1134
16.10
900
15.46
Rent
360
5.62
360
5.11
360
6.19

Table 7.3 Pinoy Corporation, Projected Income Statement, First Year by Month (in thousand pesos)
Jan
Feb
Mar
Apr
May
Jun
July
Aug
Sep
Oct
Nov
Dec
Total
288.0 420.0 480.0 500.0 600.0 600.0
Sales
120.0
192.0
480.0 640.0 720.0 780.0 5820.0
Less: Cost of
48.0
76.8
115.2 168.0 192.0
200.0
240.0 240.0 192.0 256.0 288.0 312.0 2328.0
goods sold
Gross margin
72.0
115.2
172.8
252.0
288.0
300.0
360.0
360.0
288.0 384.0
432.0
468.0
3492.0
Operating
expenses
Salaries
75.0
75.0
75.0
75.0
75.0
75.0
75.0
75.0
75.0
75.0
75.0
75.0
900.0
Rent
30.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
30.0
360.0
Utilities
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
4.0
480.0
Sales
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
15.0
180.0
expenses
Insurance
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
2.0
24.0
Depreciation
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
5.0
60.0
Total operating
131.0
131.0
131.0
131.0
131.0
131.0
131.0
131.0 131.0 131.0
131.0
131.0
1572.0
expenses
Net profit (loss)
(59.0)
(15.8)
41.8
121.0
157.0
169.0
229.0
229.0
157.0 253.0
301.0
337.0
1920.0
o o

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