CHAPTER 4 OTHER INCOME, OTHER EXPENSES AND BUSINESS RESULT
DETERMINATION
MULTIPLE CHOICE QUESTIONS
4.1 Proceeds from sales of tangible assets are recorded as:
a. Sales revenue
b. Financial revenue
c. Other income
d. None of the above answer.
4.2 Other expenses include:
a. Carrying amount of long-term assets disposed.
b. Loss due to revaluation of long-term assets invetesed in subsidiaries.
c. Fines payable due to administrative violations.
d. All are correct.
4.3 Other income includes:
a. Proceeds from disposal of long-term assets.
b. Fines receivables due to customer breach of contract.
c. Amount collected from insurance compensation.
d. All are correct.
4.4 Bad debts that have been written off before are collected, the accountant credits to account:
a. Account 511
b. Account 711
c. Account 515
d. Account 642
4.5 The business compensates for breach of contract regarding delivery terms to customers, paid
by bank transfer 5.000.000 VND. The journal entry is:
a. Dr 627 / Cr 112: 5.000.000
b. Dr 811 / Cr 112: 5.000.000
c. Dr 642 / Cr 112: 5.000.000
d. Dr 635 / Cr 112: 5.000.000
4.6 The business receives 200.000.000 VND cash in banks for for fire and explosion insurance
compensation from the insurance company. The journal entry is:
a. Dr 112 / Cr 711: 200.000.000
b. Dr 112 / Cr 511: 200.000.000
c. Dr 112 / Cr 515: 200.000.000
d. Dr 112 / Cr 811: 200.000.000
4.7 The business receives a tangible asset as a donation or a gift. The accountant records:
a. An increase in sales revenue.
b. An increase in other income.
c. An increase in financial revenue.
d. An increase in owner’s capital.
4.8 The accountant determines that the business’s result during the period is a net loss of
600.000.000 VND. The journal entry is:
a. Dr 911 / Cr 421: 600.000.000
b. Dr 911 / Cr 511: 600.000.000
c. Dr 421 / Cr 911: 600.000.000
d. Dr 511 / Cr 911: 600.000.000
4.9 The expenses which are not transferred to account 911 – Income summary include:
a. Financial expenses.
b. Other expenses.
c. Selling expenses.
d. Direct labour cost.
4.10 Fine collected from customers who violate contracts in cash in banks, the journal entry is:
a. Dr 112 / Cr 711
b. Dr 112 / Cr 131
c. Dr 112 / Cr 515
d. Dr 112 / Cr 331
4.11 Received in cash in banks from selling a tangible asset was 20.000.000 VND, 10% VAT.
Accountant records:
a. Dr 711: 20.000.000
Dr 133: 2.000.000
Cr 112: 22.000.000
b. Dr 811: 20.000.000
Dr 133: 2.000.000
Cr 112: 22.000.000
c. Dr 112: 22.000.000
Cr 711: 20.000.000
Cr 333: 2.000.000
d. Dr 112: 22.000.000
Cr 211: 20.000.000
Cr 333: 2.000.000
4.12 At the end of the period, the business’s financial performance is net profit, the accountant
records:
a. Dr 911 / Cr 421
b. Dr 421 / Cr 911
c. Dr 911 / Cr 411
d. Dr 411 / Cr 911
4.13 A net profit from operating activities occurs when:
a. Cost of goods sold is higher than selling expenses and general and administrative expenses
b. Sales are higher than cost of goods sold.
c. Sales are higher than selling expenses and general and administrative expenses.
d. Total of gross profit and financial revenue are higher than the total of financial expenses, selling
expenses and general and administrative expenses.
4.14 At the end of the period, the accountant transfers general and administrative expenses of
150.000.000 VND to determine net profit, the journal entry is:
a. Dr 642 / Cr 911: 150.000.000
b. Dr 642 / Cr 421: 150.000.000
c. Dr 911 / Cr 642: 150.000.000
d. Dr 421 / Cr 642: 150.000.000
4.15 Gross profit is the difference between:
a. Sales and sales deductions.
b. Sales and cost of goods sold.
c. Net sales and cost of goods sold.
d. Sales and net sales.
EXERCISES
E4.1
At Hoang Hon company, there were following transactions in March/N (unit: 1.000 VND):
1. Received profit sharing agreement from joint venture company 300.000.
2. Expenses for joint venture activities 100.000 paid by bank transfer.
3. Fine for violating economic contract of 35.000 paid in cash in banks.
4. Collected bad debts that were written off 2 years ago 150.000 in cash in banks.
5. Discarded a tangible asset, cost of 80.000, accumulated depreciation of 65.000. Liquidation
cost was 2.000, paid in cash on hand. The scrap was sold at price of 500, 10% VAT,
received in cash on hand.
6. Sold trading securities collected 120.000 by bank transfer. The costs of trading securities
were 90.000.
7. Wrote off a trade payable of 50.000 that was due 4 years ago but no one claimed it.
8. Received notice of dividend payment for shares held to maturity of 25.000.
9. Received notice of VAT reduction of 35.000.
10. Loan interest collected in cash in banks 20.000.
Requirements:
1. Journalize March transactions.
2. Transfer expenses, revenues and income to calculate results of financial activities and other
activities.
E4.2
Yen Thanh Company using perpetual inventory system and deductible VAT method has
following information (unit: 1.000 VND):
I - Opening balance of account 155: 300.000 (1.500 units).
II – The transactions occur during the period as follows:
1. Received 3.500 units of finished goods from manufacturing at cost of 198/unit.
2. Sold 2.000 units of finished goods to Viet Thanh company for cash in banks, the selling
price including 10% VAT was 572.000. Payment discount paid to Viet Thanh company in
cash on hand was 1%.
3. Long Thanh Company returned 1.000 products sold last month. Yen Thanh refunded
286.000 (including 10% VAT) to Long Thanh by bank transfer. The cost of returned
products was 198.000.
4. At the end of the promotion campaign, Yen Thanh offered 3% trade discount to Viet Thanh
company, paid in cash in banks.
5. Expenses incurred in the sales department and administrative department during the period
were as follows:
Departments Raw materials Salaries Salary deductions Depreciation
Sales department 2.460 6.000 According to the 2.400
Administrative department 4.900 10.000 prescribed regulation 3.200
6. At the end of the period, accountants transferred revenues, income and expenses to
determine net profit.
Requirements: Journalize the transactions.
Additional information:
- Inventory costing method is first-in, first-out method.
- There is no difference between profit before corporate income tax and taxed income.
E4.3
Yen Thanh Company using perpetual inventory system and deductible VAT method has
following information (unit: 1.000 VND):
Finished products inventory at the beginning of the 3rd quarter/N: 1.000 products A, cost
48.000/product; 1.500 products B, cost 35.000/product.
Transactions occur in the quarter:
1. Received from production division: 4.000 products A, cost 47.200/product and 2.500
products B, cost 34.000/product.
2. Sold 3.500 products A on credit to Van Thanh company at selling price excluding 10%
VAT of 65.000/product.
3. Sold 2.000 products B on credit to Truong Thanh company at selling price excluding 5%
VAT of 55.000/product.
4. Van Thanh paid the balance due less 1% payment discount on the VAT-excluding price.
5. Restored 250 products A sold in the previous period returned by the customer. The cost of
returned goods was 45.000/product, selling price excluding 10% VAT was 65.000/product.
Yen Thanh refunded to the customer by bank transfer.
6. Receive a Credit note from the bank regarding the amount less 1,5% payment discount on
VAT-excluding price, paid by Truong Thanh company.
7. Sold 750 products B to Viet Thanh company at selling price excluding 5% VAT of
48.000/product. Yen Thanh collected in cash in banks, then transferred to repay the bank
loan.
8. Selling expenses incurred during the period include: salary 15.000, salary deductions at the
prescribed rate, depreciation of long-term assets 3.750, raw materials 6.250, cash in banks
16.250.
9. General and administrative expenses incurred during the period include: salary 18.000,
salary deductions at the prescribed rate, depreciation of long-term assets 8.000, raw
materials 4.000, cash in banks 7.500.
10. Yen Thanh granted an allowance of 5.625 (including 5% VAT) to Viet Thanh due to the
low quality of products. Yen Thanh refunded to Viet Thanh by bank transfer.
11. Received a notice of interest from the bank: 15.000.
12. Fine for breach of contract paid in cash in banks: 7.500.
13. Received notice of profit sharing from joint venture company: 37.500.
14. Recovered short-term promissory notes to maturity, nominal value 87.500, interest of 8%,
received in cash in banks.
15. Deducted input VAT and paid VAT amount by bank transfer, assuming that the deductible
VAT was 7.500.
16. At the end of the period, the accountant transferred revenues, income and expenses to
determine net profit.
Additional information:
- Inventory costing method is first-in, first-out method.
- There is no difference between profit before corporate income tax and taxed income.
Requirements:
1. Journalize the 3rd quarter transactions.
2. Post the journal entries to ledger accounts of revenues, income, expenses and income
summary.
E4.4
Yen Thanh Company using perpetual inventory system and deductible VAT method has
following transactions in 12/N (unit: 1.000 VND):
1. Sold finished goods to Van Thanh company for 1.250.000 cash in banks, 10% VAT. Cost
of goods sold was 730.000.
2. Van Thanh returned some defective products costing 25.000. The selling price of these
returned goods was 52.000, 10% VAT. The transporting cost to restore returned goods was
1.100 (including 10% VAT), paid in cash on hand.
3. Sold finished goods costing 430.000 to Truong Thanh company for 675.000 cash in banks,
10% VAT.
4. Truong Thanh complained about some products not to meet qualification, Yen Thanh
offered a reduction in price of 16.500, including 10% VAT, paid to Truong Thanh by bank
transfer.
5. Invested in a joint venture company with a machine costing 560.000, accumulated
depreciation was 250.000. The Joint Venture Management Committee revaluated the
machine at a fair value of 350.000.
6. Sold some trading securities with cost of 95.000, selling price of 143.000, collected in cash
in banks.
7. Sold a tangible asset with cost of 340.000, accumulated depreciation of 260.000, selling
price excluding 10% VAT of 53.000. The cost of transporting the asset for sale including
10% VAT was 825, paid in cash on hand.
8. Invested in associate company with a tangible asset costing 520.000, accumulated
depreciation was 240.000. The asset was revaluated at a fair value of 280.000.
9. Received notice of profit sharing from associate company: 25.000.
10. Expenses incurred in the sales department and administrative department during the period
were as follows:
Departments Sales department Administrative department
Salaries 80.000 185.000
Social insurance, health insurance, unemployment According to the prescribed regulation
insurance, trade union fee
Raw materials 1.230 1.310
Supplies (1-time allocated type) 820 1.120
Depreciation 4.520 5.215
Water, electricity, telephone bills (excluding 10% VAT) 4.230 4.470
Cash on hand 2.100 14.340
Cash in banks 13.750 23.210
11. Paid a trade payable of 250.000 to Thai Thanh company by bank transfer, less 2% payment
discount.
12. Collected fines from customers for breach of contract in cash in banks: 13.000.
13. Paid fine for breach of contract 7.500 in cash on hand.
14. Paid bank loan interest by bank transfer: 12.000.
15. Received interest from bank account: 4.600.
16. Wrote off a loan account because the lender cannot be identified: 43.000.
17. At the end of the period, the accountant transferred revenues, income and expenses to
determine net profit, assuming there is no difference between profit before corporate
income tax and taxed income.
Requirements:
1. Journalize the December transactions.
2. Post the journal entries to ledger accounts of revenues, income, expenses and income
summary.
E4.5
Yen Thanh Company using perpetual inventory system and deductible VAT method trades
two types of finished goods A and B that are subject to VAT at a rate of 10%. In December, year
N, there is following information (unit: 1.000 VND):
Opening balances of accounts:
- Account 155: 179.040, including: finished goods A: 113.280 (10.000 units), finished
goods B: 65.760 (8.000 units).
- Account 131: 210.240, including: company X: 122.400, company Y: 87.840.
- Account 421: 64.480.
The business transactions occur in year N as follows:
1. Sell finished goods to customer F: 4.000 products A and 3.000 products B, receive in cash
in banks.
2. Sell finished goods to customer X on credit: 5.000 products A and 3.200 products B.
3. Collect balance due from customer X in cash in banks, net of 2% payment discount.
4. Notarization fee payable: 1.200.
5. Sell finished goods for cash in banks: 2.000 products A and 2.000 products B.
6. Sell finished goods to customer H on credit: 20.000 products A and 15.000 products B.
7. Company Y complains about the quality of products A purchased last period. Yen Thanh
agrees to reduce the price for company Y: 14.300, including 10% VAT. Company Y has
paid off all its debts by bank transfer.
8. Pay in cash in banks for:
- Advertising expense: 18.540, 10% VAT.
- Electricity and telephone bills for the administrative department: 15.230, 10% VAT.
- Shipping cost to deliver finished goods to customers: 3.200, 10% VAT.
9. General and administrative expenses incur: salaries: 65.000; social insurance, health
insurance, unemployment insurance, trade union fee are according to prescribed
regulation; depreciation: 5.200.
10. Sell a tangible asset costing 250.000, depreciated 140.000 at the price of 125.000, 10%
VAT, received in cash in banks. Expenses for sales of the asset are 2.750 (including 10%
VAT), paid in cash on hand.
11. Receive interest from bank account: 21.250.
12. Input VAT in the period is 52.300, deducted from output VAT.
13. Information of finished goods received from production division during the period:
- Finished goods A: 40.000 units at cost of 22,56/unit.
- Finished goods B: 32.000 units at cost of 16,34/unit.
14. At the end of the period, the accountant transferred revenues, income and expenses to
determine net profit, assuming there is no difference between profit before corporate
income tax and taxed income.
Additional information:
- The VAT-excluding selling prices of finished goods: A: 28/unit, B: 20/unit.
- Yen Thanh uses ending weighted average cost to calculate cost of goods sold.
Requirements:
1. Journalize the December transactions.
2. Post the journal entries to ledger accounts of revenues, income, expenses and income
summary.
E4.6
The information about revenues, income and expenses incurred in year N at Yen Thanh company
is as follows (unit: 1.000 VND):
1. Total sales revenue: 2.050.000
2. Sales deductions: trade discount: 102.500, sales allowances: 56.000, sales returns: 82.000
3. Revenues from financial activities: 174.000
4. Other income: 92.000
5. Cost of goods sold: 1.264.000, of which cost of returned goods is 52.000.
6. Financial expenses: 105.000.
7. Selling expenses: 83.000.
8. General and administrative expenses: 96.000.
9. Other expenses: 65.200.
10. At the end of the period, the accountant prepares following adjusting entries:
- Allocation of cost of supplies used in the business management department: 24.200.
- Allowance for obsolete inventory: 72.000.
- Allowance for devaluation of trading securities: 42.000.
- The loan interest incurred but not yet received: 93.100.
Requirements:
1. Post to T-accounts of revenues, income, expenses and income summary, assuming that
revenues, income, and expenses from transactions 1 to 9 do not include amount of
transaction 10 and there is no difference between profit before corporate income tax and
taxed income.
2. Prepare Statement of profit and loss.
E4.7
Yen Thanh Company using perpetual inventory system and deductible VAT method has
following transactions in 12/N (unit: 1.000 VND):
Opening balances of accounts:
- Account 131 (Debit balance): 1.500.000 (sub-accounts: customer A: 900.000, customer
B: 600.000)
- Account 2293 (customer A): 250.000
The business transactions occur during the period:
1. Sell merchandise goods to customer C on credit at a price of 500.000, 10% VAT.
2. Customer C pays the balance due in cash in banks.
3. Yen Thanh company takes physical count of merchandise goods on hand and discovers a
shortage of goods costing 15.000.
4. The shortage of merchandise goods is resolved as follows: the warehouse custodian
compensates half, the remaining amount is included in cost of goods sold.
5. Receive notice of profit sharing from joint venture company of 150.000.
6. Receive cash compensation from the warehouse custodian.
7. Pay in advance to the supplier 220.000 by bank transfer.
8. Receive compensation due to the seller's breach of contract of 45.000.
9. Collected 40.000 cash in banks from customer for compensation for breach of contract.
10. Advance 68.000 to employees by bank transfer.
11. Advance payment from the employee:
- Receive merchandise goods at the invoice price of 62.700, including 10% VAT.
- Shipping costs excluding VAT 3.500, 10% VAT, paid in cash on hand.
- The remaining amount is deducted from employee salaries.
12. At the end of the period, there is the following transactions:
- Customer A goes bankrupt, according to the court's decision, A pays Yen Thanh 500.000
by bank transfer, Yen Thanh writes off the balance.
- Recover bad debts written off from last year 20.000 in cash in banks less debt collection
costs of 1.000.
- Set up allowance for bad debts of customer B 300.000.
Requirements:
1. Journalize the December transactions and determine net profit, assuming there is no
difference between profit before corporate income tax and taxed income.
2. Post the journal entries to ledger accounts of revenues, income, expenses and income
summary.
3. Prepare Statement of profit and loss.
E4.8
Yen Thanh Company using perpetual inventory system and deductible VAT method has
following transactions in 2nd quarter/N (unit: 1.000 VND):
1. The production division completed and received 16.000 units of finished goods A at cost
of 45 each and 10.000 units of finished goods B at cost of 22,5 each.
2. Sold to Kim Thanh company 4.500 units of products A, collected by bank transfer, selling
price excluding 10% VAT is 75 each. However, Kim Thanh returned 600 units of low
quality products A. Yen Thanh received returned goods and refunded to Kim Thanh by
bank transfer.
3. Sold 6.000 units of products B on credit to Minh Thanh company at selling price excluding
10% VAT of 45 each. Then, Minh Thanh informed that there were 300 units of products
B not meeting the specification. Yen Thanh gave Minh Thanh a 20% reduction in price for
the defective products. Yen Thanh received a credit note from the bank regarding the
amount paid by Minh Anh company.
4. Sold a tangible asset with cost of 90.000, accumulated depreciation of 45.000, selling price
excluding 10% VAT of 60.000.
5. Received profit from joint venture company and dividends from trading securities by bank
transfer of 25.000.
6. Paid interest on bank loans by bank account of 6.500.
7. Expenses incurred in the sales department and administrative department during the period
were as follows:
Departments Sales department Administrative
department
Salaries 11.000 22.000
Social insurance, health insurance, unemployment insurance, According to the prescribed regulation
trade union fee
Raw materials 1.005 975
Supplies (1-time allocated type) 750 1.350
Depreciation 3.450 5.250
Water, electricity, telephone bills (excluding 10% VAT) 5.100 6.150
Cash on hand 2.700 6.000
Cash in banks 13.800 26.400
8. Deducted input VAT from output VAT and determined the VAT amount paid to State.
9. Transfer expenses, revenues and income to determine net profit.
Requirement: Journalize the transactions, assuming there is no difference between profit
before corporate income tax and taxed income.
