ABC Company was formed on January 1, 2020. The entity reported the following financial statements pertaining to the first year of operations: Income Statement Sales Cost of goods sold Inventory - January 1 Purchases Goods available for sale Inventory - December 31 Gross profit Operating expenses Expenses excluding depreciation Depreciation Income before income tax Less: Income tax expense Net Income P5,000,000 P1,000,000 3.100.000 P4,100,000 ( 900,000) 3.200.000 P1,800,000 P 700,000 100.000 800.000 P1,000,000 350,000 P 650,000 Statement of Financial Position Assets Cash Accounts receivable Inventory Land Equipment (Life- 10 years) Accumulated depreciation Total assets P 500,000 600,000 900,000 800,000 P1,000,000 100.000 900.000 P3,700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable Share capital Retained Earnings Net Income Dividends P 500,000 400,000 350,000 P1,250,000 P2,000,000 P 650,000 ( 200,000) 450.000 2.450.000 Total liabilities and shareholders' equity P3,700,000 Current cost information on December 31, 2020: Cost of goods sold at average current cost Inventory Land Equipment P3,500,000 1,000,000 1,500,000 1,600,000

ABC Company was formed on January 1, 2020. The entity reported the following financial statements pertaining to the first year of operations: Income Statement Sales Cost of goods sold Inventory - January 1 Purchases Goods available for sale Inventory - December 31 Gross profit Operating expenses Expenses excluding depreciation Depreciation Income before income tax Less: Income tax expense Net Income P5,000,000 P1,000,000 3.100.000 P4,100,000 ( 900,000) 3.200.000 P1,800,000 P 700,000 100.000 800.000 P1,000,000 350,000 P 650,000 Statement of Financial Position Assets Cash Accounts receivable Inventory Land Equipment (Life- 10 years) Accumulated depreciation Total assets P 500,000 600,000 900,000 800,000 P1,000,000 100.000 900.000 P3,700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable Share capital Retained Earnings Net Income Dividends P 500,000 400,000 350,000 P1,250,000 P2,000,000 P 650,000 ( 200,000) 450.000 2.450.000 Total liabilities and shareholders' equity P3,700,000 Current cost information on December 31, 2020: Cost of goods sold at average current cost Inventory Land Equipment P3,500,000 1,000,000 1,500,000 1,600,000

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 4RE: Refer to RE22-2. Assume Heller Company had sales revenue of 510,000 in 2019 and 650,000 in 2020....

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