The following is Bonifacio Company’s pre-audit income statement for the year ended December 31, 20x1:Sales P1,482,000Cost of Goods Sold 963,000Gross Profit 519,000Operating Expenses: Rent expense125,000 Salaries expense172,500 Utilities expense109,500 Advertising expense15,000 Warranty expense7,000 Other expenses3,500464,500Net Income 54,500You obtained the following information from the company’s accounting records:Some of Bonifacio’s customers pay for their orders in On December 31, 20x1, orders paid for in advance of shipment totaled P7,500. These have been included in the sales figure.Bonifacio’s products are sold with a 30-day money-back guarantee. Customers seldom returned the products during the Bonifacio has not included in the sales figure and in cost of goods sold those products sold within the last 30 days of the current year. The revenue is P49,000, and the cost of the products is P31,850.On July 1, 20x1, Bonifacio prepaid its office space rent for 18 The amount paid, P108,000, was recorded as rent expense.The amount of P60,000 was paid on July 1, 20x1, for general advertising to be completed prior to December 31, Bonifacio’s management believes that the advertising will benefit a two-year period and, therefore, has decided to charge the costs to the income statement at the rate of P2,500 per month.In prior years, Bonifacio has estimated warranty expense using a percentage of Future warranty costs relating to 20x1 sales are estimated to amount to 3% of sales. However, during 20x1, Bonifacio elected to charge costs to warranty expense as costs were incurred. Bonifacio spent P7,000 during 20x1 to repair and replace defective products sold in current and prior years.REQUIRED:1. Prepare should be entries and adjusting entries.2. Compute the following:Correct amount of Bonifacio’s sales revenue for 20x1Gross income for 20x1 =

The cost of goods sold typically consists of a major part of the total cost. If the company can…

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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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The following is Bonifacio Company’s pre-audit income statement for the year ended December 31, 20x1:

Sales		P1,482,000
Cost of Goods Sold		963,000
Gross Profit		519,000
Operating Expenses:
Rent expense	125,000
Salaries expense	172,500
Utilities expense	109,500
Advertising expense	15,000
Warranty expense	7,000
Other expenses	3,500	464,500
Net Income		54,500

You obtained the following information from the company’s accounting records:

Some of Bonifacio’s customers pay for their orders in On December 31, 20x1, orders paid for in advance of shipment totaled P7,500. These have been included in the sales figure.
Bonifacio’s products are sold with a 30-day money-back guarantee. Customers seldom returned the products during the Bonifacio has not included in the sales figure and in cost of goods sold those products sold within the last 30 days of the current year. The revenue is P49,000, and the cost of the products is P31,850.
On July 1, 20x1, Bonifacio prepaid its office space rent for 18 The amount paid, P108,000, was recorded as rent expense.
The amount of P60,000 was paid on July 1, 20x1, for general advertising to be completed prior to December 31, Bonifacio’s management believes that the advertising will benefit a two-year period and, therefore, has decided to charge the costs to the income statement at the rate of P2,500 per month.
In prior years, Bonifacio has estimated warranty expense using a percentage of Future warranty costs relating to 20x1 sales are estimated to amount to 3% of sales. However, during 20x1, Bonifacio elected to charge costs to warranty expense as costs were incurred. Bonifacio spent P7,000 during 20x1 to repair and replace defective products sold in current and prior years.

REQUIRED:

1. Prepare should be entries and adjusting entries.

2. Compute the following:

Correct amount of Bonifacio’s sales revenue for 20x1
Gross income for 20x1 =

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