PROBLEM 1

Stones Corporation is selling various products which are classified into three categories, depending on their values. The goods are currently stored in the entity's warehouse located inside their premises. You were engaged to audit their financial statements as of and for the period ended December 31, 2018. An observation of physical inventory count was conducted on December 30, 2018, and based on the count, the following information were gathered:

Area/Product Units Counted Unit Cost Total Cost Area 001 (H-Value Goods) Product 100A 203 103.00 20,909 Product 100B 175 102.50 17,938 Product 100C 355 101.00 35,855 Product 101A 269 100.00 26,900 Product 101B 804 99.50 79,998 Area 002 (M-Value Goods) Product 200A 1,400 74.00 103,600 Product 200B 1,544 73.60 113,638 Area 003 (L-Value Goods) Product 300A 2,000 30.00 60,000 Product 300B 2,044 26.50 54,166 Product 400A 2,039 24.80 50,567 Product 400B 3,011 23.20 69,855 Product 400C 4,300 20.50 88,150 Total 721,576Purchase Invoices Invoice Date Term Date Product Units Unit Cost Total Cost Date Goods were Recorded Received Dec. 27, 2018 FOB Ship. Pt. Dec. 27, 2018 Product 100A 10 102.50 1,025 Dec. 31, 2018 Dec. 27, 2018 FOB Ship. Pt. Dec. 28, 2018 Product 100C 20 101.00 2,020 Dec. 30, 2018 Dec. 28, 2018 FOB Dest. Dec. 31, 2018 Product 101B 15 100.00 1,500 Dec 31, 2018 Dec. 30, 2018 FOB Dest. Dec. 30, 2018 Product 200A 50 74.50 3,725 Jan. 3, 2019 Dec. 31, 2018 FOB Ship. Pt. Jan. 3, 2019 Product 200B 50 73.60 3,680 Jan. 3, 2019 Jan. 2, 2019 FOB Dest. Jan. 2, 2019 Product 400C 200 20.00 4,000 Jan. 5, 2019 Sales Invoices (all goods shipped on or before December 31, 2018 are still in transit as of December 31, 2018) Invoice Date Term Date Product Units Unit Cost Selling Date Shipped Recorded Price/u Dec. 26, 2018 FOB Ship. Pt. Dec. 28, 2018 Product 100A 20 103.00 150.00 Dec. 25, 2018 Dec. 27, 2018 FOB Dest. Dec. 28, 2018 Product 100B 10 102.50 147.00 Dec. 27, 2018 Dec. 31, 2018 FOB Ship. Pt. Dec 31, 2018 Product 101B 10 99.50 140.00 Jan. 3, 2019 Jan. 5, 2019 FOB Ship. Pt. Jan. 5, 2019 Product 400A 200 24.80 50.00 Dec. 31, 2018