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As of May 31, 2019, Company A's fiscal year-end date, its records carried the following balances: Inventory P3,000,500 Accounts Payable - P3,700,000 Net Sales
As of May 31, 2019, Company A's fiscal year-end date, its records carried the following balances: Inventory P3,000,500 Accounts Payable - P3,700,000 Net Sales -P9,650,000 Net Purchases - P7,880,000 Net Income - P1,050,300 Consider the following information: Merchandise costing P230,000 had been recorded as a purchase but not included as inventory. These were shipped FOB shipping point based on the supplier's invoice received May 31, 2019. Goods in transit, with terms FOB shipping point were included in the inventory count but no entry was made for the purchase. The goods amounted to P130,000. Goods costing P150,000 and selling for P210,000 have been segregated in the warehouse, but not yet shipped as of May 31, 2019. Sales has not been recorded for this. The purchase order stated FOB destination as shipping terms. On May 31, 2019, the Company shipped goods costing P205,000 and had a selling price of P318,000, FOB point of shipment. The transaction was recorded as sales. The cost was still included in the inventory. Goods costing P100,000 was out on consignment with Consignee Company. Upon receipt of Consignee Company's statement that these goods were on hand, these items were excluded from Company A's inventory and invoiced on May 31 at P195,000. Materials costing P300,000 and billed on May 29 at a selling price of P501,000, had been segregated in the warehouse for shipment to a customer. The materials had been excluded from inventory as a signed purchase order has been received from the customer. The terms of the shipment was FOB destination. Goods in transit, shipped FOB destination by a supplier, in the amount of P185,000, had been excluded from the inventory, and further testing revealed that the purchase had been recorded. Goods costing P120,000 had been received, included in inventory, and recorded as a purchase. However, the goods were found to be defective and would be immediately returned.
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