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October Inc., a manufacturing company, had the following information about its inventories as of December 31, 2020: Finished Goods Inventory: Item Cost Selling Price Cost

October Inc., a manufacturing company, had the following information about its inventories as of

December 31, 2020:

Finished Goods Inventory:

Item Cost Selling Price Cost to Sell

A P500,000 P1,000,000 20% of Sales Price

B 1,200,000 1,500,000 30% of Sales Price

C 800,000 1,200,000 10% of Sales Price

Work-in-process Inventory:

Item Direct

Materials

Direct Labor Overhead Cost to

Complete

Selling

Price upon

Completion

A P30,000 P50,000 P25,000 P50,000 P200,000

B 45,000 65,000 40,000 60,000 250,000

C 75,000 25,000 80,000 40,000 240,000

Raw Materials Inventory: Finished Goods A:

Item Cost Replacement

cost

RM A-01 P120,000 P125,000

RM A-02 95,000 90,000

Raw Materials Inventory: Finished Goods B:

Item Cost Replacement

cost

RM B-01 P80,000 P100,000

RM B-02 105,000 98,000

RM B-03 110,000 100,000

Raw Materials Inventory: Finished Goods C:

Item Cost Replacement

cost

RM C-01 P175,000 P170,000

RM C-02 40,000 45,000

Required:

1. What is the correct carrying value of finished goods inventory?

2. What is the correct carrying value of work-in process inventories?

3. What is the correct carrying value of raw-materials inventories?

4. Assuming direct write-off method is used to account for inventory write-down, how much should

be recognized in the profit/loss as a result of the lower of cost or net realizable value valuation

of inventories?

5. Assuming allowance method and the following allowance for inventory write-down existed at the

beginning of the year (FG - P60,000; WIP - P70,000; RM - 0), how much should be recognized

in the profit/loss as a result of the lower of cost or net realizable value valuation of inventories?

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