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Problem 2: 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 P 500,000 600,000 900,000 800,000 Inventory Land Equipment (Life – 10 years) Accumulated depreciation Total assets P1,000,000 100.000 900.000 P3,700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable P 500,000 400,000 350.000 P1,250,000 Share capital Retained Earnings Net Income Dividends 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 P3,500,000 1,000,000 1,500,000 1,600,000 Land Equipment Required: In a restated set of financial statements prepared in accordance with the current cost accounting, how much would appear as 1. Realized holding gain

Problem 2: 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 P 500,000 600,000 900,000 800,000 Inventory Land Equipment (Life – 10 years) Accumulated depreciation Total assets P1,000,000 100.000 900.000 P3,700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable P 500,000 400,000 350.000 P1,250,000 Share capital Retained Earnings Net Income Dividends 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 P3,500,000 1,000,000 1,500,000 1,600,000 Land Equipment Required: In a restated set of financial statements prepared in accordance with the current cost accounting, how much would appear as 1. Realized holding gain

FINANCIAL ACCOUNTING
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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Problem 2:

Required:

1. Realized holding gain?
2. Unrealized holding gain?
3. Net income?
4. Total noncurrent assets?
5. Total liabilities and shareholders' equity?

Problem 2: 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 P5,000,000 P1,000,000 3.100.000 P4,100,000 900.000) 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 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 P 500,000 600,000 900,000 800,000 Equipment (Life – 10 years) Accumulated depreciation Total assets P1,000,000 100.000 900.000 P3.700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable P 500,000 400,000 350.000 P1,250,000 Share capital Retained Earnings Net Income Dividends 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 P3,500,000 1,000,000 1,500,000 1,600,000 Land Equipment Required: In a restated set of financial statements prepared in accordance with the current cost accounting, how much would appear as 1. Realized holding gain 2. Unrealized holding gain 3. Net income 4. Total noncurrent assets 5. Total liabilities and shareholders' equity
Transcribed Image Text:Problem 2: 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 P5,000,000 P1,000,000 3.100.000 P4,100,000 900.000) 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 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 P 500,000 600,000 900,000 800,000 Equipment (Life – 10 years) Accumulated depreciation Total assets P1,000,000 100.000 900.000 P3.700,000 Liabilities and Shareholders' Equity Accounts payable Notes payable Income tax payable P 500,000 400,000 350.000 P1,250,000 Share capital Retained Earnings Net Income Dividends 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 P3,500,000 1,000,000 1,500,000 1,600,000 Land Equipment Required: In a restated set of financial statements prepared in accordance with the current cost accounting, how much would appear as 1. Realized holding gain 2. Unrealized holding gain 3. Net income 4. Total noncurrent assets 5. Total liabilities and shareholders' equity
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