GAMORA , JEAN ROSE A. | PONO, ANIKA G.

INTERMEDIATE ACCOUNTING 1A
CHAPTER 7 INVENTORIES

PROBLEM 4

1. Answer: B
Solution:
Beg. Inventory P 260,000
Add: Goods in Transit to customer 16,000
P 276,000

2. Answer: D
Solution:
Beg. Inventory - June 30, 2002 P 75,000
Add: Goods in Transit FOB SP 1,500
P 76,500

3. Answer: D
Solution:
Beg. Inventory P 122,000
Add: Purchases P 540,000
Freight-In 15,000
Net Purchases 555,000
Total 677,000
Less: End. Invetories (165,000)
Total COGS P 512,000

4. Answer: A
Solution:
Merchandise out on Consignment P 40,000
Add: Goods in Transit FOB SP 36,000
Goods held in Consignment 27,000
P 103,000
5. Answer: C
Solution:
Net Method: P 180,000 x .98
Particulars Dr. Cr.
Purchases 176,400
Accounts Payable 176,400

Gross Method: (P 80,000 x .98) + 100,000

Particulars Dr. Cr.
Purchases 178,400
Accounts Payable 178,400

6. Answer: A
Solution:
Particulars Dr. Cr.
Inventories 380,000
Accounts Payable 380,000

7. Answer: A
Solution:
Particulars Dr. Cr.
Purchases 196,000
Accounts Payable 196,000

TGAS P 196,000
Less: End. Inv. (19,600)
COGS P 176,400

TGAS P 196,000
x. 10
P 19,600

8. Answer: C
Solution:
Allocation to both COGS and EI
Purchases P 200,000
(40,000)
Purchase for Discount 160,000
Discount x. 98
156,800
Add: 40,000
Net Purchase 196,800
x. 10
End. Inventory P 19,680
Net Purchase P 196,800
Less: End. Inventory (19,680)
Total COGS P 177,120

9. Answer: D
Solution:
FIFO PERIODIC

Beg. Inventory P 1,400

Add: Net Purchases 1,500
TGAS P 2,900

TGAS P 2,900
Goods sold (1,900)
End. Inv. (units) P 1,000

Particulars Units Unit Total Cost

Cost
End. Inv. to be allocated 1,000
Less: Net Purchase - June 24 (700) P 30 P 21,000
Next rec. Purchase date to be allocated 300
Less: Purchases - June 14 (300) P 35 P 10,500
EI at cost P 31,500

TGAS P 82,600
Less: EI at cost (31,500)
COGS P 51,100

10. Answer: A
Solution:
WEIGHTED AVE. - PERIODIC
WA unit cost = P 82,600 / 2,900 = P 28.48

EI in units 1,000
WA in unit cost 28.48
EI at cost 28,480

TGAS 82,600
Less: EI at cost (28,480)
COGS P 54,120

11. Answer: C
Solution:
FIFO PERIODIC
Beg. Inventory P 2,000
Add: Net Purchase 9,400
TGAS P 11,400
TGAS 11,400
Less: Goods sold (7,400)
EI in units 4,000

Particulars Units Unit Total Cost

Cost
End. Inventory to be allocated 9,000
Less: Net Purchases - Nov. 29 (1,600) P 38.60 P 61,760
Bal. to be allocated for next rec. purch date 2,400
Less: Puchase - Nov. (2,400) P 38 P 91,200
EI at cost P 152,960

TGAS P 427,760
EI at cost (152,960)
COGS P 247,800
12. Answer: A
Solution:
WEIGHTED AVE. - PERIODIC
WA unit cost = P 427,760 /11,400 = P 37.52

EI in units 4,000
WA in unit cost 37.52
EI at cost 150,080

TGAS 427,760
Less: EI at cost (150,080)
COGS P 277,680

Date Transaction Units Unit Cost Total Cost

Nov. 1 Inventory 2,000 P 36.00 P 72,000
7 Purchase 3,000 37.20 111,600
12 Sales (4,200) 36.72 (154,224)
15 Purchase 4,800 38.00 182,400
16 Sales Return 600 37.82 22,692
22 Sales (3,800) 37.82 (143,716)
29 Purchase 1,900 38.60 73,340
30 Purchase Return (300) 38.16 (11,448)
EI in unit and cost 4,000 P 152,644

13. Answer: C
Solution:
TGAS P 240,000
Less: FIFO EI (65,000)
FIFO COGS P 175,000
14. Answer: B
Solution:
Invoice Price P 112,000 (P 12,000 VAT)
Shipping cost 40,000
Transit Insurance 12,000
Commission to broker 5,600
Incurred interest on loan 15,000
P 172,600

15. Answer: C
Solution:
Beg. Inventory P 60,000
Add: Net Purchase 525,000
TGAS 585,000
Less: EI (75,000)
COGS P 510,00

Purchases P 500,000
Add: Freight-In 60,000
Total 560,000
Less: Purchase return (25,000)
Purchase discount (10,000)
Net Purchases P 525,000

Sales P 1,000,000
Less: Sales return (10,000)
Sales Discount (50,000)
Net Sales P 940,000

Net Sales P 940,000

Less: COGS (510,000)
Gross Profit P 430,000

16. Answer: C
Solution:
Transaction X Y Z
Cost:
Purchase cost 50 30 109
Delivery cost from supplier 5 4 68
Cost per unit 55 34 177
NVR:
Estimated seeling price 56 60 250
Selling cost (4) (8) (75)
NVR per unit 52 52 175
Lower of Cost & NVR 52 34 175
Write-down (11,100) - (2,600)

Particulars X Y Z
Lower of Cost & NRV 52 34 175
No. of units 3,700 2,500 1,300
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Inventory - Dec. 31, 20x1 192,400 85,000 227,500 = 504,900

17. Answer: D
Solution:
Raw Materials Finished Goods
Cost 160,000 1,780,000
NRV 148,000 1,870,000

18. Answer: B
Solution:
440,000 - 410,000 = P 30,000

19. Answer: B
Solution:
Beg. Inventory P 60,000
Add: Net Purchase 525,000
TGAS 585,000
Less: EI (75,000)
COGS P 510,000

20. Answer: A
(mention on no. 19)
 PROBLEM 5

Activity #1:
Periodic System
Date Particulars Dr. Cr.
Sept. 26, 20x1 Purchases 8,500
Accounts Payable 8,500
Sept. 27, 20x1 Freight-In 1,100
Cash 1,100
Accounts Payable 7,589.29
Input VAT 910.71
Cash 8,500

Perpetual Inventory System

Date Particulars Dr. Cr.
Sept. 26, 20x1 Inventory 8,500
Accounts Payable 8,500
Sept. 27, 20x1 Inventory 1,100
Cash 1,100
Accounts Payable 7,589.29
Input VAT 910.71
Cash 8,500

Activity #2:
Requirement 2
Beg. Inventory P 5.75 TGAS P 18.75
Net Purchase 13.00 Q. of Goods sold 0
TGAS P 18.75 EI in units P 18.75

Total of Purchases Price TGAS P 18.75

Jan. 2 purchase P 6.00 Less: EI at cost (13.00)
Jan. 3 purchase 7.00 COGS P 5.75
EI at cost P 13.00

P 13.00 - ending inventory

P 5.75 - COGS

Requirement 3
 WEIGHTED AVERAGE

TGAS P 18.75
EI at cost 11.75
COGS P 7.00

PROBLEM 6

Solution #1:
Requirement A:
FOB Destination; Freight Prepaid
Date Particulars Dr. Cr.
Jan. 2, 20x2 Purchases 100,000
Accounts Payable 100,000
Jan. 5, 20x2 Accounts Payable 100,000
Cash 100,000

Requirement B:
FOB Shipping point; Freight collect
Date Particulars Dr. Cr.
Dec. 30, 20x1 Purchases 100,000
Accounts Payable 100,000
Jan. 2, 20x2 Freight-In 6,000
Cash 6,000
Jan. 5, 20x2 Accounts Payable 100,000
Cash 100,000

Requirement C:
FOB Destination; Freight collect
Date Particulars Dr. Cr.
Jan. 2, 20x2 Purchases 100,000
Accounts Payable 100,000
Accounts Payable 6,000
Cash 6,000
Jan. 5, 20x2 Accounts Payable 94,000
Cash 94,000

Requirement D:
FOB Shipping point; Freight Prepaid
Date Particulars Dr. Cr.
Dec. 30, 20x1 Purchases 100,000
Freight-In 6,000
Accounts Payable 106,000
Jan. 5, 20x2 Accounts Payable 100,000
Cash 100,000
 Solution #2:
Inventory P 180,000
Less: Goods held on consignment from XYZ (30,000)
Freight cost of goods from XYZ (1,000)
Total 149,000
Add: Inventory consignment by DEF Co. 9,000
Freight cost of goods from DEF Co. 2,000
Total: P 160,000

Solution #3:
Transaction Inventory Accounts Payable
Unadjusted balances P 500,000 P 120,000
Unshipped FOB Destination to customer 60,000
FOB Destination from supplier (80,000) (80,000)
Purchase on FOB Shipping point 50,000 50,000
FOB Shipping point to customer 30,000
Adjusted balance - Dec. 31, 20x1 P 560,000 P 90,000

Solution #4:
a. Inventory on display shelves or physical count
b. Inventory stocked in warehouse or physical count
c. Inventory sold under a bill and hold arrangements
d. Product finance

Solution #5:
Requirement A
Perpetual
Particulars Dr. Cr.
a. Inventory 450,000
Accounts Payable 450,000
b. Inventory 25,000
Cash 25,000
c. Accounts Payable 10,000
Inventory 10,000
d. Accounts Receivable 800,000
Cost of goods sold 380,000
Sales 800,000
Inventory 380,000
e. Sales return 9,000
Inventory 4,275
Accounts receivable 9,000
Cost of goods sold 4,275

Periodic
Particulars Dr. Cr.
a. Purchases 450,000
Accounts Payable 450,000
b. Freight-In 25,000
Cash 25,000
c. Accounts Payable 10,000
Purchase return 10,000
d. Accounts Receivable 800,000
Sales 800,000
e. Sales return 9,000
Accounts receivable 9,000

Requirement B
Beg. Inventory P 20,000
Add: Net Purchase 465,000
TGAS 485,000
Less: EI (109,275)
COGS P 375,725

Net Sales P 791,000

COGS 375,725
Gross Profit P 415,725

Solution #6:
Purchase Price P 100,000
Less: Trade Discount (20,000)
80,000
Add: Freight-In 15,000
Commission to broker 2,000
Advertisment Cost 10,000
Cost of inventories purchased P 107,000

Solution #7:
Gross Method
Date Particulars Dr. Cr.
Jan. 1, 20x1 Purchases 144,000
Accounts Payable 144,000
Jan. 10, 20x1 Accounts Payable 72,000
Purchase Discount 3,600
Cash 68,400
Jan. 31, 20x1 Accounts Payable 72,000
Cash 72,000

Net Method
Date Particulars Dr. Cr.
Jan. 1, 20x1 Purchases 136,800
Accounts Payable 136,800
Jan. 10, 20x1 Accounts Payable 68,400
Cash 68,400
Jan. 31, 20x1 Accounts Payable 68,400
Purchase Discount 3,600
Cash 72,000

Solution #8:
Requirement A
FIFO Periodic
Beg. Inventory P 3,000 TGAS in units 15,450
Add: Net Purchase 12,450 Less: Goods sold (9,900)
TGAS P 15,450 EI in units 5,550
Transaction Units Unit Cost Total Cost
EI to be allocated 5,550
Jan. 26 (2,250) P 20.60 P 46,350
Bal. to be allocated 3,300
Purchases - Jan. 6 (3,300) 21.50 70,950
EI at cost - P 117,300

TGAS (in peso) P 324,300

Less: EI at cost (117,300)
COGS P 207,000

Requirement B:
FIFO Perpetual
EI at cost = P 117,300 COGS = P 207,000

Requirement C:
Weighted Average - Periodic
WA= P 324,300 / 15,450 = P 20.99

EI in units 5,550 TGAS (in peso) 329,300

WA unit cost 20.99 Less: EI at cost (116,494.5)
EI at cost 116,494.5 COGS 207,805.5

Requirement D:
Weighted Average - Perpetual
Date Transaction Unit Unit Cost Total Cost
Jan. 1 Inventory 3,000 P 19.55 P 58,650
6 Purchase 10,200 21.50 219,300
7 Sales (2,700) 21.06 (56,862)
26 Purchase 2,250 20.60 46,350
31 Sales (7,200) 20.96 (151,056)
EI at cost 5,550 - P 116,382
 Solution #9:
Requirement A:
Date Particular Product A Product B Product C
Dec. 31, 20x1 Inventory 112,000 225,000 336,000

Requirement B:
Transaction Product A Product B Product C
Cost:
Purchase Cost 100,000 250,000 300,000
Freight-In 12,000 30,000 36,000
Total Cost: 112,000 280,000 336,000
NRV:
Selling Price 210,000 300,000 570,000
Freight-Out (10,500) (75,000) (11,400)
Total NRV: 199,500 225,000 558,600
Lower of Cost & NRV 112,000 225,000 336,000
Write-down - (55,000) -

Solution #10:
Date Particulars Dr. Cr.
20x1 Cost of goods sold 250,000
Inventory 250,000
20x2 Inventory 200,000
Cost of goods sold 200,000

Gain on Reversal
Date Particulars Dr. Cr.
20x2 Inventory 250,000
Cash 250,000