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01.1 Sample Problems Inventories

The document contains sample inventory problems with multiple transactions involving items received, ordered, shipped, damaged, on display, and in various stages of production. For Aman Company, the correct amount of inventory is 5,700,000. For Lunar Company, the correct amount is 5,500,000. For Carolla Company, inventory should be measured at 760,000.

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Alissa Navarro
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160 views10 pages

01.1 Sample Problems Inventories

The document contains sample inventory problems with multiple transactions involving items received, ordered, shipped, damaged, on display, and in various stages of production. For Aman Company, the correct amount of inventory is 5,700,000. For Lunar Company, the correct amount is 5,500,000. For Carolla Company, inventory should be measured at 760,000.

Uploaded by

Alissa Navarro
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Sample Problems

(Inventories)
Aman Company provided the following data:

Items counted in the bodega 4,000,000


Items included in the count specifically
segregated per sale contract (100,000)
Items in receiving department, returned by
customer, in good condition 50,000
Items ordered and in the receiving department 400,000
Items ordered, invoice received but goods not
received, Freight is on account of the seller 300,000
Items shipped today, invoice mailed,
FOB shipping point 250,000
Items shipped today, invoice mailed,
FOB destination 150,000
Items currently being used for window display 200,000
Items on counter for sale 800,000
Items in receiving department, refused because
of damage 180,000
Items included in count, damaged and unsalable (50,000)
Items in the shipping department 250,000 = 5,700,000

WHAT IS THE CORRECT AMOUNT OF INVENTORY?


Lunar Company included the following items under inventory:

Materials 1,400,000
Advance for materials ordered 200,000
Good in process 650,000
Unexpired insurance on inventory 60,000
Advertising catalogs and shipping cartons 150,000
Finished goods in factory 2,000,000
Finished goods in entity-owned retail store,
including 50% profit on cost 750,000 = 750,000/150% = 500,000
Finished goods in hands of consignees including
40% profit on sales 400,000 = 400,000 x 60% = 240,000
Finished goods in transit to customers, shipped
FOB destination at cost 250,000
Finished goods out on approval, at cost 100,000
Unsalable finished goods, at cost 50,000
Office supplies 40,000
Materials in transit, shipped FOB shipping point,
excluding freight of P30,000 330,000 + 30,000 = 360,000
Goods held on consignment, at sales price,
cost P150,000 200,000 = 5,500,000
WHAT IS THE CORRECT AMOUNT OF INVENTORY?
Carolla Ccompany incurred the following costs:

Materials 700,000
Storage costs of finished goods 180,000
Delivery to customers 40,000
Irrecoverable purchase taxes 60,000
= 760,000
AT WHAT AMOUNT SHOULD THE INVENTORY BE MEASURED?
On December 28, 2021, Kerr Company purchased goods costing
P500,000 FOB destination. These goods were received on
December 31, 2021. The costs incurred in connection with the sale
and delivery of the goods were:

Packaging for shipment 10,000


Shipping 15,000
Special handling charges 25,000

On December 31, 2021, what total cost should be included in


inventory? P500,000
Stone Company had the following transactions during December 2021:

Inventory shipped on consignment to Beta Company 1,800,000


Freight paid by Stone 90,000
Inventory received on consignment from Alpha Company 1, 200,000
Freight paid by Alpha 50,000

No sales of consigned goods were made in December 2021.

WHAT AMOUNT SHOULD BE INCLUDED IN INVENTORY ON DECEMBER 31, 2021?

1,800,000 + 90,000 = 1,890,000


Hero Company reported inventory on December 31, 2021 at 6,000,000 based on a physical count
of goods priced at cost and before any necessary year-end adjustments relating to the following:

• Included in the physical count were goods billed to a customer FOB shipping point on
December 30, 2021. These goods had a cost of P125,000 and were picked up by the carrier
on January 7, 2022.

• Goods shipped FOB shipping point on December 28, 2016, from a vendor to Hero were
received and recorded on January 4, 2021. The invoice cost was P300,000.

WHAT AMOUNT SHOULD BE REPORTED AS INVENTORY ON DECEMBER 31, 2021?

6,000,000 + 300,000 = 6,300,000


Joy Company conducted a physical count on December 31, 2021 which revealed inventory with a cost
of P4,410,000.

The following items were excluded from the physical count:

Merchandise held by Joy on consignment 610,000


Merchandise shipped by Joy FOB Destination to a
customer on December 31, 2021 and was received
by the customer on January 5, 2022 380,000
Merchandise shipped by Joy FOB shipping point to a
customer on December 31, 2021 and was received
by the customer on January 5, 2022. 460,000
Merchandise shipped by a vendor FOB Destination on
December 31, 2016 was received by Joy on
January 5, 2022. 830,000
Merchandise purchased FOB Shipping point was
shipped by the supplier on December 31, 2021
and received by Joy on January 5, 2022. 510,000

WHAT IS THE CORRECT AMOUNT OF INVENTORY ON DECEMBER 31, 2021?


= 4,410,000 + 380,000 + 510,000 = 5,300,000
Kindness company regularly buys sweaters and is allowed a
trade discount of 20% and 10%. The entity made a purchase
on March 20 and received an invoice with a list price of
P900,000, a freight charge of P50,000, and payment terms
of net 30 days. (n/30)

THE ENTITY SHOULD RECORD THE PURCHASE AT


WHAT AMOUNT?
List price 900,000
Trade discount (900,000 x .20) (180,000)
720,000
Trade discount (720,000 x .10) (72,000)
Invoice price 648,000
Freight 50,000

= 698,000
On June 1, 2021 Compassion Company sold merchandise with a list price of
P1,000,000 to a customer. The entity allowed trade discounts of 20% and 10%.
Credit terms were 5/10, n/30 and the sale was made FOB shipping point. The
entity prepaid P50,000 of delivery cost for the customer as an accommodation.

On June 11, 2021, WHAT AMOUNT IS RECEIVED FROM THE CUSTOMER AS


FULL REMITTANCE?

List price 1,000,000


Trade discount (1M x 20%) (200,000)
800,000
Trade discount (800K x 10%) (80,000)
Invoice Price 720,000
Cash discount (720,000 x 5%) (36,000)
Net amount 684,000
Freight 50,000
734,000

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