Janmarinie Cabagbag
BSBA- MM
Exercise for Income Statement of a Merchandising Business
1. During the year, Victoria Home and Garden purchased potteries, plants, dried flowers,
candles and other home and garden decors at a total cost of P300,000. In each of the
following cases, calculate the cost of goods available for sale and the cost of sales:
Case Case 1 Case 2 Case 3 Case 4 Case 5
Beginning Inventory P 0 P120,000 P 50,000 P10,000 P 0
Freight In 25,000 0 40,000 15,000 25,000
Returns and Allowance 5,000 55,000 0 21,000 11,000
Discounts 0 15,000 0 0 18,550
Ending Inventory 0 0 75,000 75,500 85,000
2. In each of the following cases, supply the missing item(s):
Case Cost of Sales Operating Expenses Net Profit
Sales Gross Profit (Net Loss)
A P 440,000 P ? P215,000 P ? P75,000
B ? 185,000 75,000 105,000 ?
C 870,000 640,000 ? ? (90,000)
D 1,250,000 ? ? 275,000 150,000
E 1,300,500 ? 579,250 ? (95,750)
3. The following information were taken from the books of Aqua-Land Sport Store which sells
all kinds of swimming gears:
Sales Returns & Allowances 4,000 Purchase Discount 6,000
Freight In 8,000 Communication Expense 45,000
Commission Expense 30,000 Sales 368,000
Purchase Returns & Allowances 7,500 Purchases 112,000
Merchandise Inventory, Dec 31 95,000 Sales Discount 25,000
Transportation Out 11,000 Rent Expense 120,000
Merchandise Inventory, Jan 1 78,500 Sales Salaries Expense 91,300
Pag-ibig Premium Expense 1,826 Taxes & Licenses 10,170
SS & EC Premium Expense 3,088 Depreciation Expense 16,500
Phil Health Premium Expense 1,200 Loss from Sale of Land 43,000
Required: Prepare an Income Statement using the multi-step form. Rent and Communications
Expenses are 25% allocated to General and Administrative Expenses.
1.
CASE 1:
Inventory Beginning, 0
Purchases 300,000
Less: Purchase Returns & Allowance 5,000
Purchase Discount 0 (5,000) 295,000
Add: Freight-In 25,000
Total Cost of Goods Available for Sale 320, 000
Less: Ending Inventory, 0
320,000
CASE 2:
Inventory Beginning, 120, 000
Purchases 300,000
Less: Purchase Returns & Allowance 55,000
Purchase Discount 15, 000 70,000
Net Purchase 230,000
Add: Freight-In 0 230,000
Total Cost of Goods Available for Sale 350,000
Less: Ending Inventory, 0
350,000
CASE 3:
Inventory Beginning, 50,000
Purchases 300,000
Less: Purchase Returns & Allowance 0
Purchase Discount 0 0
Net Purchase 300,000
Add: Freight-In 40,000 340,000
Total Cost of Goods Available for Sale 390,000
Less: Ending Inventory, (75,000)
315,000
CASE 4:
Inventory Beginning, 10,000
Purchases 300,000
Less: Purchase Returns & Allowance 21,000
Purchase Discount 0 (21,000)
Net Purchase 279,000
Add: Freight-In 15,000 294,000
Total Cost of Goods Available for Sale 304,000
Less: Ending Inventory, 75,500
228,500
CASE 5:
Inventory Beginning, 0
Purchases 300,000
Less: Purchase Returns & Allowance (11,000)
Purchase Discount 18,550 (29,500)
Net Purchase 270,450
Add: Freight-In 25,000 295,456
Total Cost of Goods Available for Sale 295,450
Less: Ending Inventory, (85,000)
P210, 450
2. In each of the following cases, supply the missing item(s):
CASE A:
Sales P440, 000
Less: Cost of Sales 225, 000
Gross Profit 215, 000
Less: Operating Expenses 140, 000
Net Profit P75, 000
CASE B:
Sales 260, 000
Less: Cost of Sales 185, 000
Gross Profit 75, 000
Less: Operating Expenses 105, 000
Net Profit (30, 000)
CASE C:
Sales 870, 000
Less: Cost of Sales 640, 000
Gross Profit 230, 000
Less: Operating Expenses 310, 000
Net Profit (90, 000)
CASE D:
Sales 1, 250, 000
Less: Cost of Sales 825, 000
Gross Profit 425, 000
Less: Operating Expenses 275, 000
Net Profit 150, 000
CASE E:
Sales 1, 300, 500
Less: Cost of Sales 721, 250
Gross Profit 579, 250
Less: Operating Expenses 675, 000
Net Profit (95, 750)
3. The following information were taken from the books of Aqua-Land Sport Store which sells
all kinds of swimming gears:
AQUA LAND SPORT STORE
INCOME STATEMENT
Income from Sales
Sales P368, 000
Less: Sales Returned
& Allowance P 4,000
Sales Discount 25,000 29,000
Net Sales P339, 000
Less Cost of Sales:
Merchandise, Inventory, Jan 1 P 78,500
Add: Net Cost of Purchases
Purchase P112, 000
Freight-In 8, 000
Total Cost of Goods Delivered 120,000
Less: Purchase returns & Allowance 6,000
Purchase Discount 7,500 106,500
Total Available for Sale 185,000
Less: Merchandise Inventory, Dec. 31 95,000 90,000
Gross Profit 249,000
Less Operating Expense
Selling
Sales Salaries Expense P91, 300
Transportation Out 11, 000
Commission Expense 30,000
Pag-ibig Premium Expense 1,826
SS & EC Premium Expense 3,088
Phil-Health Premium Expense 1,200
Depreciation Expense 16, 500
Communication Expense 33, 750
Rent Expense 90, 000 278, 664
Administrative
Rent Expense P30, 000
Communication Expense 11, 250
Taxes and Licenses 10, 170 51, 420 330,084
Operating Expenses (81,084)
Less: Loss from Sale of Land (43,000)
Net Loss (P124,084)
