10. Kesler, Inc. estimates the cost of its physical inventory at March 31 for use in an interim financial statement. The rate of markup on cost is 25%. The following account balances are available: Inventory, March 1 P220,000 Purchases 172,000 Purchase returns 8,000 Sales during March 300,000 What is the estimate of the cost of inventory at March 31 would be? 11. On January 1, 2010, the merchandise inventory of Glaus, Inc. was P800,000. During 2010 Glaus purchased P1,600,000 of merchandise and recorded sales of P2,000,000. The gross profit rate on these sales was 25%. What is the merchandise inventory of Glaus at December 31, 2010? 12. For 2010, cost of goods available for sale for Tate Corporation was P900,000. The gross profit rate was 20%. Sales for the year were P800,000. What was the amount of the ending inventory? 13. On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store. The following data are available: Sales, January 1 through April 15 P300,000 Inventory, January 1 50,000 Purchases, January 1 through April 15 250,000 Markup on cost 25% The amount of the inventory loss is estimated to be 14. The sales price for a product provides a gross profit of 25% of sales price. What is the gross profit as a percentage of cost? 15. Gamma Ray Corp. has annual sales totaling P650,000 and an average gross profit of 20% of cost. What is the peso amount of the gross profit? 16. On August 31, a hurricane destroyed a retail location of Vinny's Clothier including the entire inventory on hand at the location. The inventory on hand as of June 30 totaled P320,000. From June 30 until the time of the hurricane, the company made purchases of P85,000 and had sales of P250,000. Assuming the rate of gross profit to selling price is 40%, what is the approximate value of the inventory that was destroyed? 17. On October 31, a fire destroyed PH Inc.'s entire retail inventory. The inventory on hand as of January 1 totaled P680,000. From January 1 through the time of the fire, the company made purchases of P165,000 and had sales of P360,000. Assuming the rate of gross profit to selling price is 40%, what is the approximate value of the inventory that was destroyed? 18. On March 15, a fire destroyed Interlock Company's entire retail inventory. The inventory on hand as of January 1 totaled P1,650,000. From January 1 through the time of the fire, the company made purchases of P683,000, incurred freight-in of P78,000, and had sales of P1,210,000. Assuming the rate of gross profit to selling price is 30%, what is the approximate value of the inventory that was destroyed? 19. Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year: Cost Retail Beginning inventory P 30,000 P 50,000 Purchases 145,000 200,000 Freight-in 2,500 Net markups 8,500 Net markdowns 10,000 Employee discounts 1,000 Sales 205,000 If the ending inventory is to be valued at the lower-of- cost-or-net realizable value, what is the cost to retail ratio? Use the following information for questions 20 through 22. The following data concerning the retail inventory method are taken from the financial records of Welch Company. Cost Retail Beginning inventory P 49,000 P 70,000 Purchases 224,000 320,000 Freight-in 6,000 Net markups 20,000 Net markdowns 14,000 Sales 336,000 20. What is the ending inventory at retail should be? 21. If the ending inventory is to be valued at approximately the lower of cost or market, the calculation of the cost to retail ratio should be based on what amount of goods available for sale at (1) cost and (2) retail? 21 If the ending inventory is to be valued at approximately the lower of cost or market, the calculation of the cost to retail ratio should be based on what amount of goods available for sale at (1) cost and (2) retail? 22. If the foregoing figures are verified and a count of the ending inventory reveals that merchandise actually on hand amounts to P54,000 at retail, the business has a. realized a windfall gain. b. sustained a loss. no gain or loss as there is close coincidence of the inventories. none of these. C. d. 23. Drake Corporation had the following amounts, all at retail: Beginning inventory P 3,600 Purchases P120,000 Purchase returns 6,000 Net markups 18,000 Abnormal shortage 4,000 Net markdowns 2,800 Sales 72,000 Sales returns 1,800 Employee discounts 1,600 Normal shortage 2,600 What is Drake's ending inventory at retail? 24. Goren Corporation had the following amounts, all at retail: Beginning inventory 3,600 Purchases P100,000 Purchase returns 6,000 Net markups 18,000 Abnormal shortage 4,000 Net markdowns 2,800 Sales 72,000 Sales returns 1,800 Employee discounts 1,600 Normal shortage 2,600 What is Goren's ending inventory at retail? 25. The following information is for the Bayway Manufacturing Company for November. Inventories Beginning Ending Raw Material P17,400 P13,200 Work in Process 31,150 28,975 Finished Goods 19,200 25,500 12.570 Direct Labor (21.000 DLH @ P13) Raw Material Purchases P120,000 Insurance-Office Indirect Labor 11,200 Office Supplies Expense Factory Supplies Used 350 Insurance-Factory Other Expenses Depr. Office Equipment Depr.-Factory Equipment 17,300 Repair/Maintenance Factory 900 1.770 3,500 17.400 1. Prepare in good form a Statement of Cost of Goods Sold. 2. Compute the total Inventory Problems that can make us GREAT!!!!!!!!!! Problem 1 Hayahay Company provided the following information from its accounting records for the year ended, December 31, 2017: Inventory at December 31, 2017 per physical count on this date 980,000 Accounts Payable at December 31, 2017 586,000 Net Sales (Sales Return less sales return) 10,048,000 Additional Information follows: a. Good held on consignment amounting to P 9,000, were included in the physical count of goods and in Accounts Payable. b. Retailers were holding P 50,000, at cost, goods on consignment from Hayahay, at their stores at year end. c. Included in the physical count were goods billed to a customer FOB shipping point on December 31, 2017. These goods had a cost of P 31,000 and were billed at P 40,000. The shipment was on Hayahay's loading dock waiting to be picked up by the common carrier. d. P 15,000 worth of goods were sold in the last week of 2017 and appropriately recorded as sales of P 21,000. The goods were included in the physical count on December 31, 2017, because the goods were on the loading dock awaiting to be picked up by the customer. e. Goods were in transit from a vendor on December 31, 2017, The invoice cost was P 71,000 and were shipped FOB Shipping Point on December 29, 2017. f. Work in process inventory costing P 30,000 was sent to an outside processor for plating on December 30, 2017 g. Goods returned from a customer and held pending inspection in the returned goods area on December 31, 2017, were not included in the physical count. On January 8, 2018, the tools costing P 32,000 were inspected and returned to inventory and credit memo amounting to P 47,000 were issued to customer on the same date. h. Goods shipped to a customer FOB destination on December 26, 2017, were in transit at December 31, 2017, and had a cost of P 21,000. Upon notification of receipt by the customer on January 2, 2018, Hayahay issued an invoice for P 42,000. i. Goods with an invoice Oct of P 27,000 were recorded in the receiving report dated January 2, 2018. The goods were not included in the physical count, but it was included in the Accounts Payable at December 31, 2017 j. Goods received from a vendor on December 26, 2017, were included in the physical count. However, the related P 56,000 vendor invoice was not included in the accounts payable at December 31, 2017, because the accounts payable copy of the receiving report was lost. k. On January 3, 2018, a monthly freight bill in the amount of P 6,000 was received. The bill specifically related to merchandise purchased in December 31, 2017, one half of which is still in the inventory at year end. This bill was not yet recorded in either inventory and accounts payable. Based on the above information, answer the following: 1. The adjusted inventory as of December 31, 2017 is a. P 1,158,000 b. P 1,119,000 C.P 1,190,000 d. P 1,160,000 2. The adjusted accounts payable as of December 31, 2017 is a. P 710,000 b.P 639,000 719,000 d. P 633,000 3. The adjusted net sales as of December 31, 2017 is a.P 10,008,000 b. P 10,001,000 9,919,000 d. P 9,961,000 4. The total amount that was deducted from the unadjusted inventory based on the above audit findings is a. 9,000 b. P 15,000 C.P 24,000 d. P 54,000 5. The total amount that was added to the unadjusted inventory based on the above audit findings is a. P 151,000 b. P 183,000 c. P 234,000 d. P 204,000 C.P C.P Problem 2 You were engaged by Snooky Corp. whose main warehouse is in Lipa City, for the audit of its financial statements ending December 31, 2017. The company is in the wholesale business and makes a mark-up of 20% based on sales in all their sales. The following are the unadjusted balances of their accounts related to its inventory in its trial balance. Accounts Receivable P 520,000 Inventory 630,000 Accounts Payable 410,000 PURCHASES SALES DATE REFERENCE AMOUNT DATE REFERENCE AMOUNT Balance Forwarded 1.400,000 Balance Forwarded 2.500.000 12.20 RR No. 1114 12.000 12.27 SI No. 1020 20.000 12.30 RR No. 1116 35,000 12.28SI No. 1021 75.000 112 31 RR No 1117 21,000 12 26 SI No. 1022 5.000 12.31 RR NO. 1118 32,000 12.31 SI No. 1023 50.000 12.31 Closing Entry 1,500,000 12.31 SI No. 1024 40.000 12.31 SI No. 1025 34.000 12.31 SI No. 1026 8.000 12.31 Closing Entry 2.832.000 You observed the physical inventory of goods in the warehouse on December 31, 2017, and were satisfied that it was properly taken. When performing sales and purchases cut-off test, you found that at December 31, the last Receiving Report (RR) that had been used for goods physically received as of December 31) was No. 1117 and that no shipment has been made on Sales Invoice (SI) beyond no. 1024. You also obtained the following additional information: a. Not included in the warehouse physical inventory at December 31 were goods which had been purchased and received on RR No. 1115 but were physically segregated awaiting the receipt of the invoice, which was not received until the following year. Cost was P 20,000. b. On the evening of December 31, there were two trucks in the company's warehouse. Goods inside the trucks were not included in the physical count as of December 31: 1. Truck No. APC 321 was unloaded on January 2 of the following year and received on RR. No. 1117. The goods were shipped FOB Destination. 2. Truck No. ULI 341 was loaded and sealed on December 31 but left the company premises only on January 2. This order was sold per Sales Invoice No. 1024. The goods were shipped FOB Shipping Point c. Sales Invoice no. 1021 pertains to a shipment which was temporarily stranded at December 31 enroute to a client's customer. The client's customer received the goods which were shipped FOB Lipa. d. Enroute to the client on December 31 was a truckload of goods from supplier in Batangas were received on RR No. 1119. The goods were shipped FOB Batangas, and freight of P 2,000 was prepaid by the said supplier. Invocie price excluding freight amounted to P 54,000. 1. The correct amount of sales for the year ended, December 31, 2017 is a. P 2,750,000 b. P 2,742,000 C. P 2,675,000 d. P 2,667,000 2. The correct amount of purchases for the year ended, December 31, 2017 is a. P 1,488,000 b. P 1,542,000 P 1,522,000 d. P 1,574,000 C. 3. The correct inventory balance as of December 31, 2017 is a. P 737,000 b. P 739,000 c. P 757,000 d. P 759,000 4. The correct Accounts Receivable balance as of December 31, 2017 is a. P 446,000 b. P 478,000 c. P 363,000 d. P 438,000 5. The correct Accounts Payable balance as of December 31, 2017 is a. P 454,000 b. P 434,000 c. P 452,000 d. P 432,000