Assignment #1: Inventories

Instructions:
1. Provide what is being asked in each item. Show your solutions.
2. Write your answers in your assignment notebook.
3. Deadline for submission is on August 27, 2024 during our class schedule.

Problem 1
Centerpoint Inc. is preparing its 2019 year-end financial statements. Prior to any
adjustments, inventory is valued at P562,500. The following information has been found
relating to certain inventory transaction.
a. Goods values at P110,000 are on consignment with a customer. These goods are not
included in the P562,500 inventory figure.
b. Goods costing P27,000 were received from a vendor on January 5, 2020. The related
invoice was received and recorded on January 12, 2020. The goods were shipped on
December 31, 2019 terms FOB shipping point.
c. Goods costing P85,000 were shipped on December 31, 2019, and were delivered to
the customer on January 12, 2020. The terms of the sale were FOB Shipping point.
The goods were included in ending inventory of 2019, even though the sale was
recorded also in 2019.
d. A P35,000 shipment of goods to a customer on December 31, 2019, terms FOB
Destination was not included in the year-end inventory. The goods cost P26,000 and
were delivered to the customer on January 8, 2020. The sale was properly recorded
in 2020.
e. An invoice for goods costing P35,000 was received and recorded as a purchase on
December 31, 2019. The related goods, shipped FOB destination, were received on
January 2, 2020 and thus were not included in the physical inventory.
f. Goods valued at P65,000 are on consignment from a vendor. These goods are not
included in the year-end inventory figure.
g. A P60,000 shipment of goods to a customer on December 30, 2019, terms FOB
destination was recorded as a sale in 2019. The goods, costing P37,000 and
received by the customer on January 6, 2020, were not included in 2019 ending
inventory.

Determine the correct inventory amount to be reported on Centerpoint Inc.’s statement of

Problem 2
Mia Company submitted an inventory list on December 31, 2011 which showed a total of
P5,000,000.
● Excluded from the inventory was merchandise costing P80,000 because it was
transferred to the delivery department for packaging on December 28, 2011and for
shipping on January 2, 2012.
● The bill of lading and other import documents on a merchandise were delivered
by the bank and the trust receipt accepted by the entity on December 26, 2011. Taxes
and duties have been paid on this shipment but the broker did not deliver the merchandise
until January 7, 2012. Delivered cost of the shipment totaled P800,000. This shipment
was not included in the inventory on December 31, 2011.

● A review of the entity's purchased orders showed a commitment to buy P100,000 worth
of merchandise from Myrose Company. This was not included in the inventory
because of the goods were received on January 3, 1012.
● Supplier's invoice for P300,000 worth of merchandise dated December 28, 2011 was
received through the mail on December 30, 2011 although the goods arrived only
on January 4, 2012. Shipment terms are FOB shipping point. This items were
included in the December 31, 2011 inventory by the entity.
● Goods valued at P20,000 were received from Darlyn Company on December 28, 2011
for approval by Mia. The inventory team included this merchandise in the list but did
not place any value on it. On January 4, 2012, the entity informed the supplier by
long distance telephone of the acceptance of the goods and the supplier's invoice
was received on January 7, 2012.
● On December 27, 2011, an order for P25,000 worth of merchandise was placed. This
was included in the year-end inventory although it was received only on January 5,
2012. The seller shipped the goods FOB destination.

What is the correct inventory on December 31, 2011?

Problem 3
Myriad Company revealed the following purchase transactions occurred during the last
few days of the fiscal year, which ends December 31, and in the first few days after
that date.
1. An invoice for P50,000, FOB shipping point, was received and recorded on
December 27. The shipment was received in satisfactory condition on January 2. The
merchandise was not included in the inventory.
2. An invoice for P75,000, FOB destination, was received and recorded on December
28. The shipment was received in satisfactory condition on January 3. The
merchandise was not included in the inventory.
3. An invoice for P30,000, FOB shipping point, was received and recorded on January
4. The invoice showed that the goods had been shipped on December 28 and the
receiving report indicates that the goods had been received on January 4. The
merchandise was excluded from inventory.
4. An invoice for P90,000, FOB shipping point, was received on December 15. The
receiving report indicates that the goods were received on December 18 but across
the face of the report is the notation "merchandise not of the same quality as ordered
- returned for credit, December 19" The merchandise was included in the inventory.
5. An invoice for P140,000, FOB destination, was received and recorded on January 4.
The receiving report indicates that the goods were received on December 29. The
merchandise was included in inventory.

Required:
Prepare the adjustments on December 31. Books are still open.
Problem 4
Summer Company is a wholesaler of car seatcovers. At the beginning of the current
year, the entity's inventory consisted of 90 car seatcovers priced at P1,000 each.
During the current year, the following events occurred:
1. Purchased 800 car seatcovers on account at P1,000 each.
2. Returned 50 defective car seatcovers to supplier and received credit.
3. Paid 600 of the car seatcovers purchased
4. Sold 790 car seatcovers at P2,000 each. Received 20 car seatcovers returned by a
customer and gave credit. The goods were in excellent condition.
6. Received cash for 680 of the car seatcovers sold.
7. Physical count at year-end revealed 60 units on hand.

Required:
a. Prepare journal entries, including adjustments to record the above transactions
assuming the company uses periodic system and perpetual system.
b. Determine the cost of sales under each inventory system.

Problem 5
Fall Company began operations in the current year. The entity used perpetual inventory
system.
1. During the year, Fall Company purchased merchandise having a gross invoice cost of
P1,000,000. All purchases were made under the terms 2/10, n /30, FOB destination.
2. Fall Company paid freight charge of P50,000.
3. During the year, Fall Company paid for 80% of the merchandise within the discount
period.
4. The remaining 20% was paid beyond the discount period.
5. Fall Company sold 70% of the merchandise it acquired for cash of P1,200,000. The
other 30% remained in inventory at year-end.

Required:
Prepare journal entries to record the transactions using gross method and net method.