Mary Company reported inventory on December 31, 2020 at P1,500,000 based on a physical count priced at cost and before any unnecessary adjustment for the following:

Merchandise costing P90,000, shipped FOB shipping point from a vendor on December 30, 2020 was received and recorded on January 5, 2021.

Goods in the shipping area were excluded from inventory although shipment was not made until January 4, 2021. The goods billed to the customer FOB shipping point on December 30, 2020 had a cost of P120,000.

What amount should be reported as inventory on December 31, 2020?

SOLUTION:

Rommel Company included the following in inventory at year end:

Merchandising out on consignment at sale price

Including 40% markup on selling price400,000

Goods Purchased in transit shipped FOB shipping point360,000

Goods held on consignment by Rommel Company270,000

By what amount should the inventory be reduced?

SOLUTION:

On June 30, 2020, Oust the Turtle Corporation entered into a purchase commitment with Doll O' Might Company to provide the corporation 1,000 metric tons of white sand on May 31, 2022 for P600 per metric ton. On December 31, 2020, the price per metric ton of white sand dipped to P590.

On December 31, 2021, the white sand retails at P605 per metric ton. How much is the gain recorded in 2021?

SOLUTION:

Oust the Turtle Company records inventory using the perpetual inventory system and follows the allowance method in accounting for inventory decline. Its ending inventory's costs and net realizable values on the following dates are:

DateCOSTNRV

December 31, 2020380,000370,000

December 31, 2021400,000385,000

December 31, 2022200,000192,000

How much is the loss from inventory decline in 2022?

M Corporation provided the following data as of December 31, 2020:

Items counted in the bodega4,000,000

Items included in the count specifically segregated per sales contract100,000

Items in receiving department, returned by customer, in good condition50,000

Items ordered and in the receiving department, invoice not received400,000

Items ordered, invoice received but goods not received. Burden of freight is on

The buyer300,000

Items shipped today, invoice mailed, FOB shipping point250,000

Items shipped today, invoice mailed, FOB destination150,000

Items currently held on consignment and in bodega200,000

Items out on consignment 800,000

Items in receiving department, refused by us because of damage180,000

Items included in count, damaged. Net realizable value is P45,000 50,000

Items sold and in the shipping department. Term is FOB Shipping Point250,000

How much is the amount of inventory?

SOLUTION: