Problem Solving

The following steps serve as a guide in solving verbal problems stated in words;
1.
2.
3.
4.
5.
6.

Read and reread the problem carefully until the conditions are all clear.
Determine the given and what is to be found.
Relate the given with the quantity or part to be found.
If possible, use formula connecting the given and the required part.
Solve for the required part of the problem using the given.
Make a careful computation because a single error will turn down the whole
solution.
7. Follow the rules of rounding off numbers.
Examples:
PERCENTAGE
1. Ms. Mendoza bought a TV set for P38,500 without interest with a down
payment of P3,700 and the balance payable in 1 year.
a. Compute the monthly payment.
b. What is the percentage of the monthly payment?
2. Mr. Danilo Eleria bought a car for P650,000 with interest of 10.5% per annum.
Because of the anniversary of the company, the total amount is payable for 1
years. Find the monthly payment. What is the percentage of the monthly
payment based on the total amount?
PERCENTAGE OF INCREASE
A percentage of increase of a product is given by
Increased / Total Amount x 100%
3. A survey in Food Industry reported that in the year 2020 and 2021, the
product of rice had reached 3,068,734 metric tons and 3,856,098 metric tons.
a. Find the number of metric tons in the increase of rice in two consecutive
years
b. Percentage of increase.
4. Mrs. Delgado bought a tray of eggs with 30 pieces worth P118.50.
a. When she reached home, there were two pieces spoiled. What is the
percentage of loss?
b. What is the amount of loss?
5. A man sold his house and lot worth P1,275,500 and paid a tax of P57,397.50
for the capital gain. What percent corresponds to the amount of capital gain?
FINDING PERCENT OF PROFIT
The formula for the percents of gross and net income is:
Gross Profit = Gross Profit/Net Sales x 100%
Net Income = Net Income / Net Sales x 100%
6. A businessman with two garment stores decides to compare the results of his
operations for the week thru the following sales:
Branch A
Branch B
P 150,000
90,000
60,000
45,000
P 15,000

P 200,000
140,000
60,000
50,000
P 10,000

Which one should be more satisfied with the result?

net sales
cost of good sold
gross profit
operating expense
net income

7. Income Statement of Jun Cosmetic Shop

Net Sales
P
86,000
Cost of Good Sold
48,000
Gross Profit
38,000
Operating Expense
23,000
Net Income
15,000
8. A man sold his house and lot worth P3,550,000 and paid a tax of 4.75% for
the capital gain. What is the amount of capital gain?
9. Ms. Mendoza bought a component worth P42,000 without interest with a
down payment of P3,700 and the balance payable in 1.75 year. Compute the
monthly payment.
10.Mr. Meneses bought a bicycle for P125,500 with a VAT of 12%. How much did
Mr. Meneses paid for the bicycle?

PROFIT & LOSS

Profit is the amount by which the sales is greater than the cost of goods sold and
the operating expenses. Margin also means gain or profit.
Formulas:
NET SALES
ALLOWANCES

NET PROFIT =

GROSS SALES

REFUNDS AND

GROSS PROFIT

OPERATING EXPENSES

The NET SALES and PROFIT may also be given in scheme diagram as follows
GROSS SALES
SALES RETURNS AND ALLOWANCES
NET SALES
COST OF GOODS SOLD
GROSS PROFIT
OPERATING EXPENSES
NET PROFIT
1. Gross Sales is the actual amount received for selling the goods
2. Refunds are amount returned usually if goods are defective.
3. Net Sales are obtained when refunds are being deducted from the gross
sales.
4. Cost of Goods Sold or Buying Price is the amount paid for articles bought
including the buying expenses.
To compute for the Cost of Goods Sold for a period of time:
Available Goods
Cost of Goods Sold =

=
Beginning Inventory
+
Purchases
Available Goods
Ending Inventory

5. Inventory is an itemized list of goods on hand.

6. Gross Profit is the difference between the net sales and the cost of goods
sold. Net sales are always greater than cost of goods sold.
7. Operating Expenses or overhead are selling expenses such as salaries or
wages, travelling expenses, rentals, water, electric bills, commissions and
taxes.
8. Net Profit is the amount obtained when all the selling expenses or other cost
of doing business are deducted from the gross profit.

In case the sales are less than the cost of goods sold, there is a loss.
GROSS LOSS
NET LOSS

=
=

COGS
GROSS LOSS

NET SALES
OPERATING EXPENSES

EXAMPLES:
1. Mr. Reyes had net sales amounting to P10, 085.75. The cost of goods sold
was P4, 033.45. The operating expenses amounted to P2, 445. Find the net
profit, or net loss as the case maybe.
2. A bookstore owner had a stock of goods worth P 5, 039.80 on June 30. His
purchases after that date amounted to P3,450. On July 31, his stock of goods
on hand was P4,100.50. how much was the cost of goods sold?
3. The ABC Press has the sales of P2,625,000 for the first quarter. The expenses
are as follows: salaries and wages P650,870, rent P240,000, light and water
bills, P118,785.50, miscellaneous expenses P47,675.50. with the cost of
goods amounting to P 980,500. If there is a refund of P55,870 for defective
books, compute:
a. Net sales
b. Gross profit
c. Net profit for the first quarter
4. In one year, a cosmetic shop had net sales of P126,000 the cost of goods sold
was P73,500. The other operating expenses totaled P24,500. Find the net
income for the year.