Abm-fabm2 12_q1_w3_mod3

Republic of the Philippines Department of Education National Capital Region

DIVISION OF CITY SCHOOLS – MANILA

Manila Education Center Arroceros Forest Park Antonio J. Villegas St. Ermita, Manila

FABM2

https://theinterviewportal.com/2017/05/07/visual-merchandiser

Quarter 1 Week 3 Module 3 Learning Competency: Prepare Statement of Comprehensive Income of a Merchandising Business Using a Multi-Step Approach ABM_FABM12-Ic-d-7)

Learning Module for Accountancy, Business and Management

HOW TO USE THIS MODULE? Before starting the module, I want you to set aside other task/s that may disturb you while enjoying the lessons. Read the simple instructions below to successfully enjoy the objectives of this kit. Have fun!

1. Follow carefully all the contents and instructions indicated in every page of this module. 2. Write on your notebook the concepts about the lessons. Writing enhances learning, that is important to develop and keep in mind. 3. Perform all provided activities in the module. 4. Let your facilitator/guardian assess your answers using the answer key card. 5. Analyze conceptually the posttest and apply what you have learned.

PARTS OF THE MODULE Expectations - These are what you will be able to know after completing the lessons in the module. Pre-test - This will measure your prior knowledge and the concepts to be mastered throughout the lesson. Looking Back to your Lesson - This section will measure what learnings and skills did you understand from the previous lesson.

Brief Introduction- This section will give you an overview of the lesson. Activities - This is a set of activities you will perform with a partner. Remember - This section summarizes the concepts and applications

of the lessons. Check your Understanding - It will verify how you learned from the lesson. Post-test - This will measure how much you have learned from the entire module

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Learning Module for Accountancy, Business and Management

The Statement of Comprehensive Income of a Merchandising Business

LESSON 3

EXPECTATIONS You will represent real-life situations using statement of comprehensive income in a merchandising business. Specifically, this module will help you:

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know the Elements of a Statement of Comprehensive Income and describe  each of these in a merchandising business. Let us start your journey in learning more on SCI. I am sure you are ready and excited to answer the Pretest. Enjoy answering!

PRETEST Answer the crossword puzzle below

Hint: These are clues for you to be able to answer the puzzle

3 1

5

6

2

Down 1. This includes revenue, sales and professional fees 2. Includes cost of sales and salaries and transportation 3. Earnings from selling of merchandize 4. These are expenses other than those attributable to selling expenses 5. If expenses are higher than net income, you will arrive at…. 6. Other term for income Across

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7. ____ income includes other gains and losses of current currencies 8. An approach for a merchandizing business

Great, you finished answering the questions. You may request your facilitator to check your work. Congratulations and keep on learning!

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Learning Module for Accountancy, Business and Management

=+

LOOKING BACK TO YOUR LESSON

Directions: Solve for the net income or net loss for the following independent cases. 1. If Income is Php20,000.00 and Expenses are Php15,000 Net income /(Net Loss ) is _________ 2. If Income is Php75,000.00 and Expenses are Php100,000 Net income /(Net Loss ) is _________ 3. If Income is Php85,000.00 and Expenses are Php65,000 Net income /(Net Loss ) is _________ 4. If Income is Php56,000.00 and Expenses are Php100,000 Net income /(Net Loss ) is _________ 5. If Income is Php88,000.00 and Expenses are Php200,000 Net income /(Net Loss ) is _________

BRIEF INTRODUCTION You already learned the single approach SCI for a single proprietorship business in module 2. This module will discuss about the multi-step approach better for merchandising business. They termed it as multi-step because there are

several steps needed in order to arrive at the company’s net income. According to Haddock, Price and Farina (2012), the elements of a multi-Step approach of a merchandising company are as follows: First part is Sale, the total amount of revenue that the company was able to generate from selling products. The second part is contra revenue. Sales Returns record returns of customers or allowances for such returns. Sales returns occur when customers return their products for reasons such as but not limited to defects or change of preference. Sales discount is discount given to customers who pay early and is also known as cash discount. Sales discount is awarded to customers who pay earlier or before the deadline.

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Learning Module for Accountancy, Business and Management

For the third part is Cost of Goods Sold. This account represents the actual cost of merchandise that the company was able to sell during the year. Beginning Inventory is the amount of inventory at the beginning of the accounting period. This is also the amount of ending inventory from the previous period. Net Cost of Purchases is equal to Purchases plus Freight- In. Net Purchases is Purchases minus the contra purchases account (Purchase discount and purchase returns). Purchases is an amount of goods bought during the current accounting period. Contra Purchases is an account that is credited being “contrary” to the normal balance of purchases account. Purchase discount is account used to record early payments by the company to the suppliers of merchandise. Purchase returns is account used to record merchandise returned by the company to their suppliers. Freight In is an account used to record transportation costs of merchandise purchased by the company. This is called freight in because this is recorded when goods are transported into the company. You have to add beginning inventory and net cost of purchases for you to get the cost of goods available for sale. Ending Inventory is the total cost of inventory unsold at the end of the accounting cycle. Sales less cost of goods sold is Gross Profit Fourth Part is General and Administrative Expenses. These expenses are not directly related to the merchandising function of the company but are necessary for the business to operate effectively. Fifth Part is Selling Expenses, these expenses are those that are directly related to the main purpose of a merchandising business: the sale and delivery of merchandise. These do not include cost of goods sold and contra revenue accounts. Gross Profit less

general and administrative expenses and selling expenses will yield a net income for a positive result while net Loss for a negative result.

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Learning Module for Accountancy, Business and Management

An example of a Multi-Step Approach in a simpler format

THEONE JOY SELLING COMPANY HEADING

STATEMENT OF COMPREHENSIVE INCOME For the year ended December 31, 2020 NET SALES

Php 460,000.00

Cost of Goods Sold Gross Profit

(285,000.00) Php 175,000.00

SALES COST OF SALES GROSS PROFIT

General & Administrative Expenses Salaries Expense

(Php 20,000.00)

Rent Expense

(15,000.00)

Depreciation Expense

(10,000.00)

Utilities Expense

(5,000.00)

Miscellaneous Expense

(1,000.00)

Total

GENERAL & ADMINISTRATIVE

(51,000.00)

Selling Expenses Salaries Expense

(Php10,000.00)

Rent Expense

(8,000.00)

Depreciation Expense

(7,000.00)

Utilities Expense

(6,000.00)

Total Net Income

(31,000.00) Php 93,000.00

Comprehensive Income Total Net Income before Tax

SELLING EXPENSES

7,000.00 Php100,000.00 ============

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NET INCOME/ (NET LOSS)

Learning Module for Accountancy, Business and Management

ACTIVITIES Activity 1. Determine whether the account title is general or selling. 1. Salaries of administrative assistant 2. Salaries of utility staff 3. Salaries of sales agents 4. Light and water of home office 5. Rental of Sales office building 6. Depreciation of office equipment 7. Depreciation of delivery van 8. Advertising expenses 9. Commission expense 10. Sales Commission of Account Executive

Activity 2 . Solve for the elements of Comprehensive Income for the following independent Activity: 1. Joy Ride Company’s salaries to sales agents amounted to Php10,000. Salaries of accountants amounted to Php20,000. No other expenses were incurred. How much is the company’s general and administrative expense? 2. Joy Ride’s beginning inventory amounted to Php250,000. Net purchases

amounted to Php70,000. Freight is 15,000. Compute for the company’s cost of goods available for sale. 3. Joy Ride’s purchases is Php100,000 while purchase returns and purchase

discounts amounted to Php20,000 and Php10,000 respectively. How much is the company’s purchases? 4. Company’s Cost of Goods Sold amounted to Php235,000. Net cost of

purchases totaled Php85,000. Beginning inventory amounted to Php250,000. Sales amounted to Php500,000. Compute for the company’s Ending Inventory. 5. Gross profit of Happy Joy Ride amounted to Php175,000. Net Sales is

Php300,000, compute for cost of goods sold?

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Learning Module for Accountancy, Business and Management

Activity 3. Prepare a multi-step Statement of Comprehensive Income for the following accounts taken from Tin’s Ready to Wear Companyfor the period ended of December 31, 2019 Net Sales Php75, 000.00, Cost of Sales Php30, 000.00, General and Administrative Expenses Php12,000.00 and Selling Expenses Php25, 000.00

REMEMBER The elements of a Comprehensive Income for a merchandising business are Net Sales, Cost of Sales, and Expenses. Expenses are presented according to function of expense method which is a Multi-Step Approach for a merchandising business. Other expenses under the function of expense method are distribution cost, administrative expenses, other expenses, interest expense and income tax expense. 1. Net Sales is equal to sales less contra sales account (sales returns and allowances and sales discount ) 2. Gross Profit is equal to n et Sales less Cost of Goods Sold (Cost of Sales) 3. To arrive at cost of sales, you have to deduct merchandise inventory end to the cost of goods available for sales. 4. To get the amount of cost of goods available for sale, you have add net cost of purchases to merchandise inventory beginning. 5. Add freight in to Net purchases to get the Net Cost of purchases 6. Net Purchases is equal to purchases less purchase discount and purchase returns and allowances.

CHECK YOUR UNDERSTANDING Prepare the Statement of Comprehensive income using a Multi-step Approach: Sales

Php80,000.00

Merchandise Inventory beg Php5,000.00

Sales Discount

5,000.00

Net Purchases

Sales Returns

2,000.00

Freight In

Merchandise Inventory End

3,500.00

General Expenses Selling Expenses

10, 500.00 8,000.00 12,000.00 4,000.00

POSTTEST Choose the letter corresponding to the correct answer for each of the questions provided below: Marie Co Company’s accounts show the following balances as June 30, 2020 Net Sales Cost of Sales Rent Expense (3/4 pertains to the Sales Department) Salaries Expense (2/5 pertains to General & Admin) Sales Commission Expense Freight Out Insurance Expense Interest Expense Other comprehensive income

Php1,250,000.00 380,000.00 20,000.00 250,000.00 80,000.00 50,000.00 25,000.00 10,000.00 30,000.00

1. What is the gross profit of Marie Co? a. Php870,000 c. Php1,520,000 b. Php280.000 d. Php1,200,000 2. What is the amount of salaries attributable to non-sales personnel? a. Php250,000 c. Php100,000 b. Php150,000 d. Php50,000 3. What is the rent expense attributable to Sales Department? a. Php120,000 c. Php80,000 b. Php90,000 d. Php100,000 4. How much is the total General and Administrative Expenses? a. Php250,000 c. Php155,000 b. Php125,000 d. Php165,000 5. How much is the total Selling Expenses? a. Php370,000 c. Php365,000 b. Php320,000 d. Php300,00 6. How much is the comprehensive income of Marie Co? a. Php315,000 c. Php365,000 b. Php380,000 d. Php120,000 9

Learning Module for Accountancy, Business and Management

7. How much is income tax expense (hint: 35%) a. Php110,000 c.Php145,000 b. Php109,500 d.Php127,750 8. How much is comprehensive income after tax? a.Php230,000 c. Php240,000 b Php237,250 d. Php335,000

REFLECTIVE LEARNING SHEET

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Covid 19 has a great impact in every family and businesses including that of a merchandising business. Their sales increases or decreases. Do you know any business who increases their sales during covid? How about your family, what did your family do to increase family income and to lessen expenses during pandemic?

https://sites.google.com/a/howland.k12.oh.us/mrs-hoso-s-social-studies/contact-information

The merchandising or trading business that increased their sales during covid: __________________________________________________________________ To increase our income we _____________________________________________ ________________________________________________________________________ ________________________________________________________________________

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Learning Module for Accountancy, Business and Management

E-SITES To further explore the concept learned today and if it possible to connect the internet, you may visit the following links: https://www.accountingcoach.com/onlineaccountingcourse

REFERENCES Ferrer, R & Millan, Z. V. (2017). Fundamentals of Accountancy, Business & Management Part 2. (1st Ed): Sto Tomas, Baguio City: Bandolin Enterprise Haddock, M., Price, J., & Farina, M. (2012). College Accounting: A Contemporary Approach, Second Edition. New York: McGraw-Hill/Irwin. Valencia, E. G., & Roxas, G. F. (2010). Basic Accounting (3rd ed.) Mandaluyong City, Philippines: Valencia Educational Supply. Anastacio, V. ( 2011). Accounting Essentials 1, Centro Escolar University Publisher Teaching Guide in Senior High School Fundamentals of Accountancy Business and Management 2, donated by the Commission on Higher Education in Collaboration with the Philippine Normal University to Department of Education

Acknowledgment Writer: Editor: Evaluator: Illustrator:

Ma. Cristina A. Labay, MM Isabel A. Gumaru, DBA Ellaine I. Dela Cruz, DBA Ma. Cristina A. Labay, MM

Validators & Reviewers: Remylinda T. Soriano, EPS Angelita Z. Modesto, PSDS George B. Borromeo, PSDS Management Team : Maria Magdalena M. Lim, Schools Division Superintendent, Manila Aida H. Rondilla, Chief Education Supervisor Lucky S. Carpio, EPS in charge of LRMDS Lady Hannah C. Gillo, Librarian II, LRMDS

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Learning Module for Accountancy, Business and Management

ANSWER KEY PRETEST

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LOOKING BACK TO YOUR LESSON:

1. Net Income Php 5,000.00 2. Net Loss (Php 25,000.00) 3. Net Income Php 20,000.00

4. 5.

ACTIVITIES: Activity 1 1. 2. 3. 4. 5.

General General Selling General Selling

6. General 7. Selling 8. Selling 9. Selling 10. Selling

Activity 2: 1. 2. 3. 4. 5.

Php20,000.00 Php335,000.00 Php70,000.00 Php100,000.00 Php125,000.00

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(Php44,000.00) (Php122,000.00)

Learning Module for Accountancy, Business and Management

Activity 3 Tin’s Ready to Wear Company Statement of Comprehensive Income For the period ended December 2019 Sales Cost of Sales Gross Profit General and Administrative Selling Expenses Net Income

Php75,000.00 30.000.00 Php45,000.00 (12,000.00) (25,000.00 Php8,000.00 ==========

CHECK YOUR UNDERSTANDING: Company Name Statement of Comprehensive Income For the period ended June 30, 2019 Net Sales Php73,000.00 Cost of Sales 20,000.00 Gross Profit Php53,000.00 General & Admin (12,000.00) Selling Expenses (4,000.00) Net Income Php37,000.00 Tax Expense 000.00 Net Income after Tax Php 37,000.00 ========== POSTTEST 1. 2. 3. 4. 5. 7. 8.

a Php870,000 (1,250,000 – 380,000) c Php100,000 (250,000 X 2/5) b Php90,000 (120,000 x ¾) d Php165,000 (100,000 +30,000 + 25,000 + 10,000) a Php370,000 (150,000 +90,000 + 80,000 + 50,000) d Php127,750 (365,000 x .35) b Php237,250 (365,000 – 127,750)

WORKSHEET 3 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

selling general selling selling general general selling general selling general 14

Learning Module for Accountancy, Business and Management

Name: ____________________Grade Level: ______Section: _____Score:_______ Teacher:_________________________ School:________________________________ Worksheet Week 3 Objective: To be able to acquire the knowledge in the preparation of Statement of Comprehensive Income. Learning Content: To be able to differentiate general and administrative expenses from selling expenses and familiarize with the elements of Statement of Comprehensive Income Instructions: Identify if the account given is part of General and Administrative Expenses or Selling Expenses

1. Utility expense sales department 2. Payment for janitorial services 3. Salaries of collector/messenger 4. Representation Expenses of sales manager 5. Salaries of an administrative assistant 6. Gasoline Expense of the head of Human Resource Department 7. Payment of bill boards, print ads and brochures 8. Supplies Expense for home office 9. Insurance Expense of the delivery van 10. Insurance of the car of the president

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