Question
ACCOUNTING FOR INVENTORTY( Merchandising entity) Problem 1: The following information was taken fromthe balancesheet of Judah Company : December 31, 2017 December 31, 2016 Cash
ACCOUNTING FOR INVENTORTY( Merchandising entity)
Problem 1:
The following information was taken fromthe balancesheet of Judah Company :
December 31, 2017 December 31, 2016
Cash 706,600 200,000
Notes Receivable 0 50,000
Inventory ? 399,750
Accounts Payable ? 150,000
All operating expenses are paid in cash and all purchases are made on account. Judah sells only one product. All sales are cash sales which are made for P 100 per unit. The company purchases 1,500 units of inventory per month and values its inventory using periodic FIFO. The unit cost of inventory on January 2017 was P 65.20 and increased P0.20 per month during the year. During 2017, payments to suppliers totaled P 943,400 and operating expenses totaled P 440,000. Ending inventory for 2016 was valued at P 65.00 per unit.
1.) Number of units sold in 2017 is
a.18,900b. 18,400c. 16,000d. 21,400
2.) Total cost of purchases during 2017 is
a.P 1,173,600b. P 1,191,600c. P 1,213,200d. P 1,193,400
3.) Accounts Payable balance at December 31, 2017 is
a.P 793,400b. P 393,400c. P 400,000d. P 419,800
4.) Inventory quantity at December 31, 2017 is
a. 5,750b. 6,550c. 5,250d. 8,150
5.) FIFO Cost of Inventory on December 31, 2017
a.P 352,500b. P 439,230c. P 385,900d. P 425,830
Problem 2:
Jobbilee Food Co. uses perpetual inventory system and assigns cost to inventory on a FIFO basis. Transactions and related information regarding its two best selling products, Candy Beads and Candy Sugar. The following are Jobbilee's data on these inventories for December2017, the last month of the company's reporting period.
Candy Beads
Unit of Packaging: Case contains 24 x 410 g cans
Inventory, Dec. 1 : 350 cases at P 196
Purchases: Dec 10 - 200 cases at P 195 per case
Dec 19 - 470 cases at P 197 per case
Purchase terms: 2/10, n/30, FOB Shipping Point
December Sales : 730 cases at P 285
Returns and Allowances: A customer returned 50 cases that had been shipped in error. The customer's account was credited for P 14,250
Physical count at Dec 31: 326 cases on hand
Explanation of Variance: No explanation found-assume stolen
Net Realizable Value at December 31 : P 290 per case
Candy Sugar
Unit of Packaging: Box containing 12 x 4 kg bags
Inventory, Dec. 1 : 625 boxes at P 384
Purchases: Dec 3- 150 boxes at P 384.50 per box
Dec. 15 - 200 boxes at P 384.50 per box
Dec. 29 - 240 boxes at P 390 per box
Purchase terms: n/30, FOB Destination
December Sales: 950 boxes at P 400
Returns and Allowances: As the December 15 purchase was unloaded, 10 boxes were discovered damaged. A credit of p 3,845 was received by Jobbilee
Physical count at Dec 31: 15 boxes on hand
Explanation of Variance: Boxes purchased on December 29 still in transit
Net Realizable Value at December 31 : P 385 per box
1.) The cost of Candy Beads assumed to be stolen is
a.P 2,744b. P 4,060c. P 2,730d. P 2,758
2.) The cost of Candy sugar inventory on December 31, 2017
a.P 5,850b. P 5,760c. P 5,767d. P 5,775
3.) The total cost of Jobillee inventory on December 31, 2017
a.P 69,989b. P 72,747c. P 77,301d. P 100,315
4.) The amount of loss on decline in value of inventory that should be recognized at the end of reporting period
a.P 38,236b. P 7,910c. P 30,326`d. P 0
5.) PAS 2 requires inventory to be stated at the lower of cost or
a.Fair valueb. Net realizable valuec. Nominal Valued. Net Selling Price
Problem 6
Vangie Company is a manufacturer of small tools. The following information was obtained from the company's financial records for the year ended, December 31, 2017.
Inventory, Dec. 31, 2017 (Based on the physical count on Dec. 31, 2017: P 1,870,000
Accounts Receivable, December 31, 2017: 2,450,000
Accounts Payable, December 31, 2017 : 1,415,000 Net Sales: 9,693,400
Net Purchases: 6,734,500
Your audit reveals the following information:
a.) The physical count included tools to be shipped to a customer on December 31, 2017 under a special sales agreement, "bill and hold". Furthermore, the goods were produced with special specification by the customer. These tools cost P 56,000 and were invoiced and recorded as sales in December at P 67,200. They were segregated awaiting pick up by the customer.
b.) Goods shipped FOB shipping point by a vendor were in transit on December 31, 2017. The invoice of the said goods which amounted to P 73,000 were received and recorded on January 5, 2018.
c.) Not included in the physical count were goods returned by the customer on December 31, 2017. These goods costing P 39,000 were inspected and returned to inventory on January 7, 2018 since they were still in sellable condition. Credit memos for P 46,800 were issued to the customers and were recorded at that date.
d.) In transit to a customer on December 31, 2017, were tools costing P 17,000 shipped FOB destination on December 26, 2017. A sales invoice for P 20,400 was issued and recorded on December 26, 2017.
e.) At exactly 5 pm on December 31, 2017, goods costing P 29, 600 were received from a vendor. The related invoice was recorded on December 31, 2017 but the goods was not included in the physical count.
f.) Included in the physical count were goods received from a vendor on December 27, 2017. However the related invoice for P 42,000 was not recorded because the accounting department's copy for the receiving report is yet to be received by the office.
g.) A monthly freight bill of P21,000 was received on January 3, 2018. It is specifically related to merchandise bought on December 31, 2017, one third of which is still in inventory at year end. The freight was only recorded when it was received.
1.The should be inventory balance is
a.P 1,972,600b. P 1,979,600c. P 1,943,000d. P 1,926,000
2.The Accounts Receivable balance should be
a.P 2,450,000b. P 2,403,200c. P 2,382,800d. P 2,352,800
3.The Accounts Payable balance should be
a.P 1,528,000b. P 1,560,000c. P 1,551,000d. P 1,591,200
4.The net Sales is
a.P 9,614,900b. P 9,596,200c. P 9,625,600d. P 9,626,200
5.The net adjustment to Net Income is to decrease by
a.P 123,200b. P 109,200c. P 93,600d. P 81,200
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