Homework Help is Here – Start Your Trial Now!
Business
Accounting
How much is the net effect of the transactions listed above on profit or loss before tax in the first quarter interim financial statements of Puge Co.? Among the transactions of Puge Co. for the first two quarters of 20x1 were the following: a. Puge Co. recognized a P200,000 write-down in its inventory during the first quarter. Puge Co. had expected that the write-down will reverse in the second quarter, and in fact, in the second quarter, the recovery exceeded the previous write-down by P40,000. b. Puge Co. provides warranty for its sales. In the first quarter, Puge Co. estimated a 5% warranty obligation on its first quarter sales of P2,000,000. In the second quarter, a change in accounting estimate was made. It was estimated that the cost of warranty should be 10% of total sales. The second quarter sales amounted to P2,400,000. c. Puge Co. has been estimating its bad debt expense as 2% of credit sales. However, in the second quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for doubtful accounts as of June 30, 20x1 is computed at P60,000. The allowance has a balance of P10,000 at the beginning of the year. Total write-offs during the first six months of 20x1 amounted to P24,000; recoveries totaled P6,000. Credit sales for the 1t and 2nd quarters amounted to P2,000,000 and P4,000,000, respectively.

How much is the net effect of the transactions listed above on profit or loss before tax in the first quarter interim financial statements of Puge Co.? Among the transactions of Puge Co. for the first two quarters of 20x1 were the following: a. Puge Co. recognized a P200,000 write-down in its inventory during the first quarter. Puge Co. had expected that the write-down will reverse in the second quarter, and in fact, in the second quarter, the recovery exceeded the previous write-down by P40,000. b. Puge Co. provides warranty for its sales. In the first quarter, Puge Co. estimated a 5% warranty obligation on its first quarter sales of P2,000,000. In the second quarter, a change in accounting estimate was made. It was estimated that the cost of warranty should be 10% of total sales. The second quarter sales amounted to P2,400,000. c. Puge Co. has been estimating its bad debt expense as 2% of credit sales. However, in the second quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for doubtful accounts as of June 30, 20x1 is computed at P60,000. The allowance has a balance of P10,000 at the beginning of the year. Total write-offs during the first six months of 20x1 amounted to P24,000; recoveries totaled P6,000. Credit sales for the 1t and 2nd quarters amounted to P2,000,000 and P4,000,000, respectively.

Intermediate Accounting: Reporting And Analysis
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
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
See similar textbooks
icon
Related questions
Question

Q4-1

How much is the net effect of the transactions listed above on profit or loss before tax in the first quarter interim financial statements of Puge Co.? Among the transactions of Puge Co. for the first two quarters of 20x1 were the following: a. Puge Co. recognized a P200,000 write-down in its inventory during the first quarter. Puge Co. had expected that the write-down will reverse in the second quarter, and in fact, in the second quarter, the recovery exceeded the previous write-down by P40,000. b. Puge Co. provides warranty for its sales. In the first quarter, Puge Co. estimated a 5% warranty obligation on its first quarter sales of P2,000,000. In the second quarter, a change in accounting estimate was made. It was estimated that the cost of warranty should be 10% of total sales. The second quarter sales amounted to P2,400,000. c. Puge Co. has been estimating its bad debt expense as 2% of credit sales. However, in the second quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for doubtful accounts as of June 30, 20x1 is computed at P60,000. The allowance has a balance of P10,000 at the beginning of the year. Total write-offs during the first six months of 20x1 amounted to P24,000; recoveries totaled P6,000. Credit sales for the 1t and 2nd quarters amounted to P2,000,000 and P4,000,000, respectively.
Transcribed Image Text:How much is the net effect of the transactions listed above on profit or loss before tax in the first quarter interim financial statements of Puge Co.? Among the transactions of Puge Co. for the first two quarters of 20x1 were the following: a. Puge Co. recognized a P200,000 write-down in its inventory during the first quarter. Puge Co. had expected that the write-down will reverse in the second quarter, and in fact, in the second quarter, the recovery exceeded the previous write-down by P40,000. b. Puge Co. provides warranty for its sales. In the first quarter, Puge Co. estimated a 5% warranty obligation on its first quarter sales of P2,000,000. In the second quarter, a change in accounting estimate was made. It was estimated that the cost of warranty should be 10% of total sales. The second quarter sales amounted to P2,400,000. c. Puge Co. has been estimating its bad debt expense as 2% of credit sales. However, in the second quarter, a change was made to the percentage of ending receivable. Under this method, the required balance of the allowance for doubtful accounts as of June 30, 20x1 is computed at P60,000. The allowance has a balance of P10,000 at the beginning of the year. Total write-offs during the first six months of 20x1 amounted to P24,000; recoveries totaled P6,000. Credit sales for the 1t and 2nd quarters amounted to P2,000,000 and P4,000,000, respectively.
Expert Solution
steps

Step by step

Solved in 2 steps with 3 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Effect Of Interest Rate
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Financial Accounting: The Impact on Decision Make…
Financial Accounting: The Impact on Decision Make…
Accounting
ISBN:
9781305654174
Author:
Gary A. Porter, Curtis L. Norton
Publisher:
Cengage Learning
Principles of Accounting Volume 1
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
SEE MORE TEXTBOOKS