Answer to Question #239587 in Accounting for samantha

Question

2020, latter half 2020, latter half

Gross purchases ₱280,000 

Purchase returns and discounts 16% of the overall value 

Beginning inventory Value of last semester’s ending inventory

Ending inventory 30% lower than the beginning inventory 

Gross profit 60% based on cost of goods sold

Distribution expenses 10% of net sales 

Administrative expenses 15% of gross profit 

Income tax expense 30% of net income before taxes

Other comprehensive income 200% of income tax expense 

Net income ? (6)

Cost of goods sold ? (7)

Other comprehensive income ? (8)

Comprehensive income ? (9)

Income tax expenses ? (10)

Answer 1

Solution:

Derive cost of goods sold:

Cost of goods sold = Beginning inventory + Net purchases – Ending inventory

Beginning inventory = 106,600

Gross Purchases = 280,000

Net purchases = Gross purchases – Purchase returns & discounts

Purchase returns & discounts = 16$\%$ of gross purchases value = 280,000 $\times 16\%$ = 44,800

Net purchases = 280,000 – 44,800 = 235,200

Ending inventory = 30$\%$ lower than the beginning inventory = 106,600 $\times 70\%$ = 74,620

Cost of goods sold = 106,600 + 235,200 – 74,620 = 267,180

 

Gross profit = 60$\%$ of Cost of goods sold = 267,180 $\times 60\%$ = 160,308

Gross profit = Net sales – Cost of goods sold

Net sales = Cost of goods sold + Gross profit

Net sales = 267,180 + 160,308 = 427,488

Distribution expenses = 10$\%$ of net sales = 427,488 $\times 10\%$ = 42,748.80

Administrative expenses = 15$\%$ of gross profit = 160,308$\times 15\%$ = 24,046.20

Net income before taxes = Gross profit – Distribution expenses – Administrative expenses

Net income before taxes = 160,308 – 42,748.80 – 24,046.20 = 93,513

Income tax expense = 30$\%$ of Net income before taxes = 93,513$\times 30\%$ = 28,053.90

Net income = Net income before taxes – Income tax expense = 93,513 – 28,053.90 = 64,459.10

Other comprehensive income = 200$\%$ of income tax expense = 28,053.90 $\times 200\%$ = 56,107.80

Comprehensive income = Net income + Other comprehensive income

Comprehensive income = 64,459.10 + 56,107.80 = 121,566.90

Net income (6) = ₱64,459.10

 

Cost of goods sold (7) = ₱267,180

 

Other comprehensive income (8) = ₱56,107.80

 

Comprehensive income (9) = ₱121,566.90

 

Income tax expenses (10) = ₱28,053.90