PROBLEM 1. The income statement of Angel Company for the year ended December 31, 2017 shows the following:

Sales	P9,000,000
Cost of goods sold	(5,600,000)
Gross profit	P3,400,000
Operating expenses	( 960,000)
Operating income	P2,440,000
Gain on sale of equipment	280,000
Profit from continuing operations before income tax	P2,720,000
Income tax	( 952,000)
Profit from continuing operations after income tax	P1,768,000
Discontinued operations, net of income tax savings of P455,000	( 845,000)
Profit for the period	P 923,000

The tax rate is 35%.

Third quarter sales were 30% of total sales. For interim reporting purposes, a gross profit rate of 38% can be justified. Variable operating expenses are allocated based on the same basis as sales, while fixed operating expenses are allocated based on the expiration of time.

Of the total operating expenses, P600,000 relate to variable expenses. The equipment was sold on June 1, 2017. A segment was discontinued during the third quarter. Assume that revenue and expenses of this discontinued segment were earned and incurred evenly during the first three quarters. The gain on sale of equipment is related to the discontinued operations.

Question 1

How much is the Net Sales for the third quarter?

Question 2

How much is the cost of goods sold for the third quarter?

Question 3

How much is the operating expenses for the third quarter?

Question 4

How much is the Income Tax Expense for the third quarter?

Question 5

How much is the discontinued operation income (loss) for the third quarter?