INDIA COMPANY

15 Commission to broker 10,000

Levies by commodity exchanges 3,000
Transfer taxes and duties 5,000
Total cost to sell 18,000 B

16 Price in the principal market 200,000

Less: Transpost cost (7,000)
Farm gate price 193,000
Less: Cost to sell (18,000)
FV - CTS 12/31/2025 175,000 D

JAMAICA DAIRY
17 Milk harvested during 2025 36,200 B

18 Beginning balance 780,000

Change in FV due to growth and price changes 242,000
Decrease in FV due to harvest (28,000)
Ending balance 994,000 D

KYRGYZTAN FARMS
19 100 x 48,000 4,800,000
20 x 14,000 280,000
FV - CTS 12/31/2025 5,080,000 C

Beginning balance -
Purchase of cows (100 x 30,000) 3,000,000
20 Price change (SADD):
100 x (36,000 - 30,000) 600,000
20 x (10,000 - 8,000) 40,000 640,000 A
21 Physical change (DASD):
100 x (48,000 - 36,000) 1,200,000
20 x (14,000 - 10,000) 80,000
New born (20 x 8,000) 160,000 1,440,000 B
Ending balance 5,080,000
Unadjusted balance
Goods held on consignment
Goods sold in transit (FOB DP)
Goods sold in transit (FOB SP)
Goods purchased in transit (FOB DP)
Goods purchased in transit (FOB SP)
Adjusted inventory 12/31/2025

Unadjusted balance
Goods held on consignment
Completed goods on cust. Specification
Store supplies
Goods sold FOB DP in transit
Goods purchased FOB SP in transit
Adjusted inventory 12/31/2025

Beginning inventory
Purchases:

TGAS

Cost per unit = 471,000 / 13,500 =

Units on hand (13,500 - 3,500 - 4,5000)
Cost of ending inventory (periodic)
Aug 1 Beg inventory
Purchase
Balance
Sale
Balance
Purchase
Balance
Sale
Balance
Purchase
Ending balances

Aug 30 purchase (2,500 x 38)

5,500 units Aug 21 purchase (3,000 x 36)
Ending inventory cost
DIRECT METHOD
1. If the NRV < Cost, NRV - decrease in the future utility of the inv
2. The decrease (write down) of inventory is absorb by cost of sal
3. NRV < Cost, the cost of sales under direct is higher than allowa
4. Adjusting entyr:
Cost of sales xx
Inventory

ALLOWANCE METHOD
1. If the NRV < Cost - non operating expense reproted in PL
2. Charged to loss on inventory write down
3. In computation of the cost of sale, uses the cost of beginning a
ending inventories
4. The difference of EI at cost and LCNRV of Ei is the ending bala
of the allowance for inventory write down.
5. Adjusting entry:
A. Ending allowance is greater than beginning allowance:
Loss on inventory writedown
Allowance for IWD

B. Ending allowance is less than beginning allowance:

Allowance for IWD
Gain on recovery

Beginning inventory
Add: Net purchases
TGAS
Less: Ending inventory
Cost of sales

Ending inventory:
Cost
NRV

Beginning inventory
Add: Net purchases
TGAS
Less: Ending inventory
Cost of sales

Ending inventory:
Cost
NRV

Allowance for IWD

20,000
15,000
5,000

Estimated selling price

Less: Est. cost to sell
NRV per unit
Cost per unit

LCNRV per unit

Total units of end inventory
Total LCNRV of ending inventory

Total cost of ending inventory

Loss on inventory write down
 Allowance - LY
2,000
2,000
gain -

Beginning inventory
Add: Net purchases
TGAS
Less: estimated cost of sales
A. Adjusted sales x (100% - GP%)
B. Adjusted sales / (100% + GP%)
Estimated ending inventory
Less: Cost of undamaged inventory
A. Cost of goods in transit (owned)
B. Cost of goods out on consignment
Less: Salvage value of damaged inventory
Estimated loss on fire (etc)
Beginning inventory
Add: Net purchases (3.2M + 60K - 400K - 80K)
TGAS
Less: Cost of sales (based on sales):
Sales
Sales returns
Discounts to favored customers
Adjusted sales
Multiplied by
Estimated ending inventory
Less: Salvage value of damaged inventory
Less: Cost of undamage inv (500,000 x 70%)
Loss

Beginning inventory
Add: Net purchases (3.2M + 60K - 400K - 80K)
TGAS
Less: Cost of sales (based on cost):
Sales
Sales returns
Discounts to favored customers
Adjusted sales
Divided by
Estimated ending inventory
Less: Salvage value of damaged inventory
Less: Cost of undamage inv (500,000 / 130%)
Loss
Raw materials, beg
Purchases of raw materials
Raw materials, end
Direct materials
Direct labor
Manufacturing overhead
Total manufacturing cost
Work in process, beg
Cost of goods put into process
Work in process, end
Cost of goods manufactured and completed
Finished goods, beg
Total goods available for sale
Finished goods, end
Cost of goods sold

TGAS at cost
Average = TGAS at retail
 TGAS at cost - Beg. Inv at cost
FiFo = TGAS at retail - Beg. Inv at retail

TGAS at cost
Conventional = TGAS at retail + Net mark down
(Conservative)

TGAS at retail
Less: adjusted sales
Sales xx
Sales returns (xx)
Normal losses xx
Discounts to employees xx
Discounts to favored cust. xx
Ending inventory at retail
Multiplied by cost to retail ratio (CRR)
Ending inventory at cost
Average = 60.00% 6,570,000
Fifo = 60.89% 6,570,000
Conventional = 58.16% 6,570,000
Active market price
Less: Transport cost
Farm gate price
Less: CTS (10,000 + 3,000 + 5,000)
FV - CTS
Beginning balance
Changes in FV - CTS
Harvest
Ending balance

PRICE CHANGE (SADD)

100 x (36,000 - 30,000)
20 x (10,000 - 8,000)
Total price change

PHYSICAL CHANGE (DASD)

100 x (48,000 - 36,000)
20 x (14,000 - 10,000)
New born (20 x 8,000)
Total physical change

4 years old (100 x 48,000)

1/2 year old (20 x 14,000)
Total FV-CTS 12/31/2025
5,000,000
(400,000)
- Correctly included
(120,000)
(610,000)
- Correctly included
3,870,000

2,000,000
(180,000)
(200,000)
(50,000)
 35,000
70,000
1,675,000

Units Cost
2,000 60,000
4,000 136,000
5,000 180,000
2,500 95,000
13,500 471,000

34.89
5,500
191,895
 Units UC Cost
2,000 30.00 60,000
4,000 34.00 136,000
6,000 32.67 196,000
(3,500) 32.67 (114,333)
2,500 32.67 81,667
5,000 36.00 180,000
7,500 34.89 261,667
(4,500) 34.89 (157,000)
3,000 34.89 104,667
2,500 38.00 95,000
5,500 36.30 199,667

00 x 38) 95,000
00 x 36) 108,000
203,000
ure utility of the inventory
bsorb by cost of sales
s higher than allowance.

xx

eproted in PL

cost of beginning and

i is the ending balance

allowance:
xx
xx

owance:
xx
xx
Direct Allowance
100,000 100,000
600,000 600,000
700,000 700,000
(280,000) (300,000)
420,000 400,000

300,000
280,000
20,000
Direct Allowance
280,000 300,000
1,000,000 1,000,000
1,280,000 1,300,000
(495,000) (500,000)
785,000 800,000

500,000
495,000
5,000

LY NR PM
300 250 200
(20) (30) (25)
280 220 175
250 240 160

250 220 160

2,000 4,000 3,000
500,000 880,000 480,000

500,000 960,000 480,000

- 80,000 -
 Allowance - NR Allowance - PM
20,000
loss 60,000 15,500
80,000 gain

xx
xx
xx

(xx)
xx

(xx)
(xx)
(xx)
xx
 600,000
2,780,000
3,380,000

3,600,000
(160,000)
260,000
3,700,000
70% (2,590,000)
790,000
(125,000)
(350,000)
315,000

600,000
2,780,000
3,380,000

3,600,000
(160,000)
260,000
3,700,000
130% (2,846,154)
533,846
(125,000)
(384,615)
24,231
 xx 11,000
xx 150,000
(xx) (15,000)
xx 146,000
xx 60,000
xx 55,000
xx 261,000
xx 20,000
xx 281,000
(xx) (24,000)
xx 257,000
xx 12,500
xx 269,500
(xx) (9,000)
xx 260,500

at cost
= xx.xx%
at retail
Beg. Inv at cost
= xx.xx%
Beg. Inv at retail

at cost
= xx.xx%
+ Net mark down

xx

(xx)
xx
xx%
xx
 Cost Retail
1,300,000 2,600,000
18,000,000 30,000,000
402,000 -
(600,000) (1,000,000)
(300,000) -
450,000 600,000
(200,000) (350,000)
(50,000) (80,000)
- 900,000
- (1,000,000)
19,002,000 31,670,000

3,942,000
4,000,473
3,821,112

31,670,000
24,700,000
(350,000)
600,000
150,000 25,100,000
6,570,000
200,000
(7,000)
193,000
(18,000)
175,000
 780,000
242,000
(28,000)
994,000

600,000
40,000
640,000

1,200,000
80,000
160,000
1,440,000

4,800,000
 280,000
5,080,000
included

included
1,860,000

1,940,000
80,000
llowance - PM
15,500