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Problem 4-11 (PHILCPA Adapted)
Ronalyn Company reported that the financial records were destroyed
by fire at the end of the current year,
He ver, certain statistical data related to the income statement are
Interest expense 200,000
Cost of goods sold 3,000,000
Sales discount 300,000
The beginning inventory was P500,000 and decreased 20% during the
year.
Administrative expenses are 25% of cost of goods sold but only 10%
of gross sales.
Distribution costs represent 70% of the operating expenses.
1. What amount should be reported as gross sales? Solution 4-11
Question I Answer @
9
Cost of goods sold (10% / 25%)
Cost of goods sold
Divide by cost ratio
Gross sales
Question 2 Answer b
x 7,500,000)
enses (10%
(750,000 / 30%)
Administrative xP
Operating expenses
‘Administrative expenses
Distribution costs
Question 3 Answer a
Sales
Sales discount
Net sales
Cost of goods sold
Gross income
Administrative expenses
Distribution costs
Interest expense
Income before income tax
8
4,200,000
(_ 750,000)
(1,750,000) |
(200,000) |
1,500,000
