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Answers FAR - CASE ANALYSIS

The document provides financial statements for Youth Company for the year 2020, including: 1) An income statement showing net sales of $8,870,000, cost of goods sold of $5,900,000, expenses of $1,610,000, income before tax of $1,360,000, and net income of $1,000,000. 2) Working notes calculating the amounts in the income statement. 3) A single statement comprehensive income for another company showing total income of $4,200,000, expenses of $950,000, income before tax of $3,250,000, income tax expense of $950,000 and net income of $2

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155 views

Answers FAR - CASE ANALYSIS

The document provides financial statements for Youth Company for the year 2020, including: 1) An income statement showing net sales of $8,870,000, cost of goods sold of $5,900,000, expenses of $1,610,000, income before tax of $1,360,000, and net income of $1,000,000. 2) Working notes calculating the amounts in the income statement. 3) A single statement comprehensive income for another company showing total income of $4,200,000, expenses of $950,000, income before tax of $3,250,000, income tax expense of $950,000 and net income of $2

Uploaded by

Jaquelyn Clata
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1.

2. Case 2: Prepare an income statement

In the books of Youth Company

Income statement

For the year 2020

Particulars Amount Amount

Net sales revenue 8,870,000

Less: Cost of goods sold 5,900,000

Gross income 2,970,000

Less: Expenses

Distribution costs  690,000

Administrative expenses 580,000

Other expense 340,000 1,610,000

Income before tax 1,360,000

Less: Income tax expense (360,000)

Net income 1,000,000


Working Note-
1. Computation of net sales revenue-

Particulars Amount

Sales 9,070,000

Sales returns and allowances  (200,000)

Net sales revenue 8,870,000


2. Computation of cost of goods sold-

Particulars Amount Amount

Beginning inventory 1,500,000

Purchases 5,750,000

Transportation in 150,000

Purchase discounts (100,000)  5,800,000

Goods available for sale 7,300,000

Ending inventory (1,400,000)

Cost of goods sold 5,900,000


3. Computation of distribution cost-

Particulars Amount

Depreciation – store equipment 110,000

Store supplies 480,000

Sales salaries 500,000

Total 690,000
4. Computation of administrative expenses-

Particulars Amount

Officer’s salaries 400,000

Depreciation – building 120,000

Office supplies  60,000

Total 580,000
5. Computation of other expenses-
Uninsured flood loss worth 340,000 will be considered as an other expense.
3. Case 3: Prepare Single statement Comprehensive Income

Sales 9,500,000
Cost of goods sold 6,000,000
Gross income 3,500,000
Other income (250,000+ 100,000)
350,000
Share of profit of associate
350,000
Total income 4,200,000
Expenses:
Distribution costs 500,000
Administrative expenses 300,000
Finance cost 150,000 950,000
Income before income tax
3,250,000
Income tax expense 950,000
Net income 2,300,000
Sales 9,500,000
Cost of goods sold 6,000,000
Gross income 3,500,000
Other income (250,000+ 100,000) 350,000
Share of profit of associate 350,000
Total income 4,200,000
Expenses:
Distribution costs 500,000
Administrative expenses 300,000
Finance cost 150,000 950,000
Income before income tax 3,250,000
Income tax expense 950,000
Net income 2,300,000

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