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Problem 2: ABC Company was formed on January 1, 2020. The entity reported the following financial statements pertaining to the first year of operations: Income Statement Sales Cost of goods sold Inventory - January 1 Purchases Goods available for sale Inventory - December 31 Gross profit Operating expenses Expenses excluding depreciation Depreciation Income before income tax Less: Income tax expense Net Income P5,000,000 P1,000,000 3.100.000 P4,100,000 ( 900,000) _3.200.000 P1,800,000 P 700,000 100.000 800.000 P1,000,000 350.000 P 650,000 Statement of Financial Position Assets Cash Accounts receivable Inventory Land P 500,000 600,000 900,000 800,000 Equipment (Life – 10 years) Accumulated depreciation Total assets P1,000,000 100.000 900.000 P3.700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable P 500,000 400,000 350.000 P1,250,000 P2,000,000 Share capital Retained Earnings Net Income Dividends P 650,000 ( 200,000) 450.000 2.450.000 Total liabilities and shareholders' equity P3,700,000 Current cost information on December 31, 2020: Cost of goods sold at average current cost Inventory Land Equipment P3,500,000 1,000,000 1,500,000 1,600,000

Problem 2: ABC Company was formed on January 1, 2020. The entity reported the following financial statements pertaining to the first year of operations: Income Statement Sales Cost of goods sold Inventory - January 1 Purchases Goods available for sale Inventory - December 31 Gross profit Operating expenses Expenses excluding depreciation Depreciation Income before income tax Less: Income tax expense Net Income P5,000,000 P1,000,000 3.100.000 P4,100,000 ( 900,000) _3.200.000 P1,800,000 P 700,000 100.000 800.000 P1,000,000 350.000 P 650,000 Statement of Financial Position Assets Cash Accounts receivable Inventory Land P 500,000 600,000 900,000 800,000 Equipment (Life – 10 years) Accumulated depreciation Total assets P1,000,000 100.000 900.000 P3.700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable P 500,000 400,000 350.000 P1,250,000 P2,000,000 Share capital Retained Earnings Net Income Dividends P 650,000 ( 200,000) 450.000 2.450.000 Total liabilities and shareholders' equity P3,700,000 Current cost information on December 31, 2020: Cost of goods sold at average current cost Inventory Land Equipment P3,500,000 1,000,000 1,500,000 1,600,000

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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Problem 2: ABC Company was formed on January 1, 2020. The entity reported the following financial statements pertaining to the first year of operations: Income Statement Sales Cost of goods sold Inventory – January 1 Purchases P5,000,000 P1,000,000 3.100.000 P4,100,000 900.000) Goods available for sale Inventory - December 31 Gross profit Operating expenses Expenses excluding depreciation Depreciation Income before income tax Less: Income tax expense Net Income 3.200.000 P1,800,000 P 700,000 100.000 800.000 P1,000,000 350.000 P 650,000 Statement of Financial Position Assets Cash Accounts receivable Inventory Land P 500,000 600,000 900,000 800,000 Equipment (Life – 10 years) Accumulated depreciation Total assets P1,000,000 100.000 900.000 P3,700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable P 500,000 400,000 350.000 P1,250,000 Share capital Retained Earnings Net Income Dividends P2,000,000 P 650,000 ( 200,000) 450.000 2.450.000 Total liabilities and shareholders' equity P3.700,000 Current cost information on December 31, 2020: Cost of goods sold at average current cost Inventory P3,500,000 1,000,000 1,500,000 1,600,000 Land Equipment Required: In a restated set of financial statements prepared in accordance with the current cost accounting, how much would appear as
Transcribed Image Text:Problem 2: ABC Company was formed on January 1, 2020. The entity reported the following financial statements pertaining to the first year of operations: Income Statement Sales Cost of goods sold Inventory – January 1 Purchases P5,000,000 P1,000,000 3.100.000 P4,100,000 900.000) Goods available for sale Inventory - December 31 Gross profit Operating expenses Expenses excluding depreciation Depreciation Income before income tax Less: Income tax expense Net Income 3.200.000 P1,800,000 P 700,000 100.000 800.000 P1,000,000 350.000 P 650,000 Statement of Financial Position Assets Cash Accounts receivable Inventory Land P 500,000 600,000 900,000 800,000 Equipment (Life – 10 years) Accumulated depreciation Total assets P1,000,000 100.000 900.000 P3,700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable P 500,000 400,000 350.000 P1,250,000 Share capital Retained Earnings Net Income Dividends P2,000,000 P 650,000 ( 200,000) 450.000 2.450.000 Total liabilities and shareholders' equity P3.700,000 Current cost information on December 31, 2020: Cost of goods sold at average current cost Inventory P3,500,000 1,000,000 1,500,000 1,600,000 Land Equipment Required: In a restated set of financial statements prepared in accordance with the current cost accounting, how much would appear as
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