Chicken Wings Company prepared the following income statement for the year ended December 31, 2020: Sales Cost of Goods Sold Gross profit Gain on sale of equipment P 6,000,000 (2,800,000) P 3,200,000 100,000 P 3,300,000 ( 500,000) ( 300,000) P 2,500,000 ( 875,000) P 1,625,000 Total Income Operating expenses Casualty loss Income before tax Income tax Net income • Income tax rate is 30%. • Third quarter sales were 30% of total sales. For interim reporting purposes, a gross profit rate of 40% can be justified. Variable operating expenses are allocated in the same proportion as sales. Fixed operating expenses are allocated based on expiration of time. Of the total operating expenses, P400,000 relate to variable expenses. The equipment is sold on September 1, 2020. The casualty loss occurred on June 5, 2020.

Chicken Wings Company prepared the following income statement for the year ended December 31, 2020: Sales Cost of Goods Sold Gross profit Gain on sale of equipment P 6,000,000 (2,800,000) P 3,200,000 100,000 P 3,300,000 ( 500,000) ( 300,000) P 2,500,000 ( 875,000) P 1,625,000 Total Income Operating expenses Casualty loss Income before tax Income tax Net income • Income tax rate is 30%. • Third quarter sales were 30% of total sales. For interim reporting purposes, a gross profit rate of 40% can be justified. Variable operating expenses are allocated in the same proportion as sales. Fixed operating expenses are allocated based on expiration of time. Of the total operating expenses, P400,000 relate to variable expenses. The equipment is sold on September 1, 2020. The casualty loss occurred on June 5, 2020.

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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