Question 1

Jenny Company uses a periodic inventory accounting

system and values its inventory by using the lower of cost

or net realizable value method. The allowance method is

used in applying the lower of cost or net realizable value.

The company adjusts and closes its book annually on

December 31. Below are the cost and market values of

the company's year-end inventories for a three-year

period:

Cost NRV

December 31, 2021 700,000 700,000

December 31, 2022 560,000 460,000

December 31, 2023 640,000 580,000

Which of the following journal entries would be correct as

of December 31, 2023, to apply the lower of cost or NRV?

Question 2

The following figures relate to inventory of materials held

by Axew Corporation at December 31:

Item X Item Y

Cost 200,000 400,000

Replacement cost 180,000 370,000

Estimated cost to convert materials into

finished goods 100,000 200,000

Estimated selling price of finished goods 320,000 610,000

Estimated cost to sell 10,000 15,000

35. What is the measurement of inventory in the statement of

financial position?

36. Axew Corporation should recognize loss on write-down

of inventory of materials of?

Question 3

On December 31, 2020, Roseland Company experienced

a decline in the value of inventory resulting in writedown

from P4,000,000 cost to P3,500,000 net realizable value.

The entity used the allowance method to record the

necessary adjustment. In 2021, market conditions have

improved dramatically.

On December 31, 2021, the inventory had a cost of

P5,000,000 and net realizable value of P4,800,000. The

entity made purchases of P20,000,000 in 2021?

37. What amount should be recognized as gain on reversal

of inventory writedown in 2021?

38. What amount should be reported as cost of goods sold

in 2021?

39. If the company is using direct write off method, what

amount should be reported as cost of goods sold in

2021?