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la rch 31, 2021. The follow g the first quarter:

la rch 31, 2021. The follow g the first quarter:

FINANCIAL ACCOUNTING
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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MEDIOCRE Co. is preparing its interim financial statements for the period ended March 31, 2021. The following relate to the transactions during the first quarter: 1. Total sales for the interim period was P2,000,000. 2. Cost of sales was P900,000. 3. MEDIOCRE is liable for 5% commission on its sales to its sales representatives and agents. No commission has yet been paid as of March 31, 2021. 4. The allowance for doubtful accounts has a balance of P10,000 as of January 1, 2021. The required balance as of March 31, 2021 is P30,000. There were no write-offs or recoveries during the period. 5. A building with historical cost of P2,400,000 is being depreciated over 5 years using straight line method. 6. MEDIOCRE prepaid a one-yearinsurance on its assets for P80,000 on January 1, 2021,. 7. Property taxes for 2021 amounting to P52,000 was paid in January. 8. Advertising costs of P100,000 were incurred in February on promotional activities held on Valentine's Day. 9. Year-end staff bonuses are expected to be around P184,000. Employees become entitled to the bonuses as they provide services to MEDIOCRE during the year. 10. MEDIOCRE's president is entitled to a 10% bonus on profit before bonus and taxes. 11
Transcribed Image Text:MEDIOCRE Co. is preparing its interim financial statements for the period ended March 31, 2021. The following relate to the transactions during the first quarter: 1. Total sales for the interim period was P2,000,000. 2. Cost of sales was P900,000. 3. MEDIOCRE is liable for 5% commission on its sales to its sales representatives and agents. No commission has yet been paid as of March 31, 2021. 4. The allowance for doubtful accounts has a balance of P10,000 as of January 1, 2021. The required balance as of March 31, 2021 is P30,000. There were no write-offs or recoveries during the period. 5. A building with historical cost of P2,400,000 is being depreciated over 5 years using straight line method. 6. MEDIOCRE prepaid a one-yearinsurance on its assets for P80,000 on January 1, 2021,. 7. Property taxes for 2021 amounting to P52,000 was paid in January. 8. Advertising costs of P100,000 were incurred in February on promotional activities held on Valentine's Day. 9. Year-end staff bonuses are expected to be around P184,000. Employees become entitled to the bonuses as they provide services to MEDIOCRE during the year. 10. MEDIOCRE's president is entitled to a 10% bonus on profit before bonus and taxes. 11
10. MEDIOCRE's president is entitled to a 10% bonus on profit before bonus and taxes. 11. Loss on sale of a used equipment on March 2, 2021 was P60,000. 12. MEDIOCRE incurred P24,000 on unanticipated repairs on its factory equipment on March 16, 2021. 13. Due to the unexpected breakdown of the factory equipment on March 16, 2021, FATUOUS has planned a major periodic overhaul of its other equipment to be held annually starting on December 31, 2021. The cost of the major planned periodic overhaul is estimated at P96,000. 14. MEDIOCRE leases one of its retail stores. Monthly rentals are P10,000, however, the lease contracts provide for a contingent rent equal to 2% of the excess of sales over P1,800,000. 15. MEDIOCRE's budget for 2021 included charitable contributions of P58,000 and emmployee training costs of P26,000. None of those costs were incurred as of March 31, 2021. 16. Other operating expenses incurred during the first quarter totaled P240,000. Requirement: Compute for the profit or loss for the first quarter ended March 31, 2021. (answer should be like this, no peso sign: 800,000; 700,000)
Transcribed Image Text:10. MEDIOCRE's president is entitled to a 10% bonus on profit before bonus and taxes. 11. Loss on sale of a used equipment on March 2, 2021 was P60,000. 12. MEDIOCRE incurred P24,000 on unanticipated repairs on its factory equipment on March 16, 2021. 13. Due to the unexpected breakdown of the factory equipment on March 16, 2021, FATUOUS has planned a major periodic overhaul of its other equipment to be held annually starting on December 31, 2021. The cost of the major planned periodic overhaul is estimated at P96,000. 14. MEDIOCRE leases one of its retail stores. Monthly rentals are P10,000, however, the lease contracts provide for a contingent rent equal to 2% of the excess of sales over P1,800,000. 15. MEDIOCRE's budget for 2021 included charitable contributions of P58,000 and emmployee training costs of P26,000. None of those costs were incurred as of March 31, 2021. 16. Other operating expenses incurred during the first quarter totaled P240,000. Requirement: Compute for the profit or loss for the first quarter ended March 31, 2021. (answer should be like this, no peso sign: 800,000; 700,000)
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