What are the effects of the transactions listed above on profit or loss before tax in the second quarter interim financial statements of WRY?
Among the transactions of WRY TO TWIST Company for the first two quarters of 20x1 were the following:
WRY recognized a ₱200,000 write-down in its inventory during the first quarter. WRY had expected that the write-down will reverse in the second quarter, and in fact, in the second quarter, the recovery exceeded the previous write-down by ₱40,000.
WRY provides warranty for its sales. In the first quarter, WRY estimated a 5% warranty obligation on its first quarter sales of ₱2,000,000. In the second quarter, a change in accounting estimate was made. It was estimated that the cost of warranty should be 10% of total sales. The second quarter sales amounted to ₱2,400,000.
WRY has been estimating its
Requirement: What are the effects of the transactions listed above on profit or loss before tax in the second quarter interim financial statements of WRY?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
