Reference no: EM132815753

Problem 1 - Monami Company uses the weighted average method to determine the cost of its inventory. Monami recorded the following information pertaining to its inventory:

Units Units cost Total cost

Balance 1/1 160,000 60 P9,600,000

Sold on 1/15 140,000

Purchased on 1/31 80,000 90 7,200,000

Required -

1. What amount of inventory should Monami report in its January 31, 2021 statement of financial position using the perpetual inventory system?

Perpetual

A. P 8,400,000

B. P 7,000,000

C. P 8,400,000

D. P 7,000,000

2. What amount of inventory should Monami report in its January 31, 2021 statement of financial position using the periodic inventory system?

Periodic

A. P 7,000,000

B. P 8,400,000

C. P 7,500,000

D. P 7,500,000

Problem 2 - Riptide Company included the following items in its inventory on December 31, 2020:

Merchandise out on consignment, at sales price, including 25% markup on cost P4,000,000

Goods purchased in transit, FOB destination 2,000,000

Goods held on consignment by Riptide Company 1,000,000

Required -

3. By what amount should the inventory at December 31, 2020 be reduced?

a. P3,800,000

b. P2,000,000

c. P1,800,000

d. P1,000,000

Problem 3 - Gumamela Company installs replacement siding, windows, and louvered glass doors for family homes. At December 31, 2020, the balance of inventory account was P502,000, and the allowance for inventory write down was P33,000. The inventory cost and market data at December 31, 2020, are as follows:

	Cost	Replacement Cost	Sales Price	NRV	Normal Profit
Aluminum siding	P89,000	P86,000	P91,500	P87,000	P5,000
Mahogany siding	94,000	92,000	93,000	85,000	7,000
Louvered glass door	125,000	135,000	129,000	111,000	10,000
Glass windows	194,000	114,000	205,000	197,000	20,000
Total	P502,000	P427,000	P518,500	P480,000	P32,000

Required -

4. The correct balance of the inventory after any allowance for write down is

a. P427,000

b. P486,500

c. P480,000

d. P477,000

Problem 4 - Lucas Co. operates a ready-to-wear (RTW) department store in downtown Manila. Because of the observable pattern between its cost and retail price, Lucas Co. used retail inventory method of estimating its inventory for interim reporting as of and for the 3 months period ending 30 September 2020. The records of Lucas Co. shows the following:

Beginning inventory at cost P85,000

Beginning inventory at retail 106,250

Net purchases at cost 95,628

Net purchases at retail 139,880

Net mark up 25,000

Net mark down 5,500

Net sales 60,000

Sales discount 3,000

Sales returns 4,000

Sales allowance 2,000

Employee discount 5,000

Theft and shrinkage (normal) 1,500

Required -

1. Using FIFO retail inventory method, Lucas Co.'s ending inventory as of 30 September 2020 is

a. P123,428

b. P116,478

c. P132,428

d. P114,678

Problem 5 - Hunter Co. is a calendar-year retailer. Its year-end physical count of inventory on hand did not consider the effects of the following transactions:

Goods with a cost of P50,000 were shipped by Hunter FOB shipping point on December 30 and were tendered to and accepted by the buyer on January 4.

Goods with a cost of P40,000 were shipped FOB destination by a vendor on December 30 and were tendered to and accepted by Hunter on January 4.

Goods were sold on the installment basis by Hunter. Installment receivables representing sales of goods with a cost of P30,000 were reported at year-end. Hunter retains title to such goods until full payment is made.

Goods with a cost of P20,000 were held on consignment for a vendor. These goods were excluded from the count although they were sold in January.

Required -

2. If inventory based solely on the physical count of items on hand equaled P1 million. Hunter should report inventory at year-end of ____________

Problem 6 - Henke Co. uses the retail inventory method to estimate its inventory for interim statement purposes. Data relating to the computation of the inventory at July 31, 2020, are as follows:

	Cost	Retail
Inventory, 2/1/20	P200,000	P250,000
Purchases	1,000,000	1,575,000
Markups, net		175,000
Sales		1,750,000
Estimated normal shoplifting losses		20,000
Markdowns, net		110,000

Required -

3. Under the lower-of-cost-or-net realizable value method, Henke's estimated inventory at July 31, 2020 is

A. P 72,000.

B. P 84,000.

C. P 96,000.

D. P 120,000.

Problem 7 - Crane Sales Company uses the retail inventory method to value its merchandise inventory. The following information is available for the current year:

	Cost	Retail
Beginning inventory	P30,000	P50,000
Purchases	145,000	200,000
Freight-in	2,500	-
Net markups	-	8,500
Net markdowns	-	10,000
Employee discounts	-	1,000
Sales	-	205,000

Required -

4. If the ending inventory is to be valued at the lower-of-cost-or-net realizable value, what is the cost to retail ratio?

A. P 177,500 ÷ P 250,000

B. P 177,500 ÷ P 258,500

C. P 175,000 ÷ P 260,000

D. P 177,500 ÷ P 248,500

Problem 8 - On January 1, a store had inventory of P 48,000. January purchases were P 46,000 and January sales were P 90,000. On February 1 a fire destroyed most of the inventory. The rate of gross profit was 25% of cost. Merchandise with a selling price of P 5,000 remained undamaged after the fire.

Required -

5. Compute the amount of the fire loss, assuming the store had no insurance coverage.

Problem 9 - Vogts Company sells TVs. The perpetual inventory was stated as P 28,500 on the books at December 31, 2020. At the close of the year, a new approach for compiling inventory was used and apparently a satisfactory cut-off for preparation of financial statements was not made. Some events that occurred are as follows.

1. TVs shipped to a customer January 2, 2021 costing P 5,000 were included in inventory at December 31, 2020. The sale was recorded in 2021.

2. TVs costing P 12,000 received December 30, 2020, were recorded as received on January 2, 2021.

3. TVs received during 2020 costing P 4,600 were recorded twice in the inventory account.

4. TVs shipped to a customer December 28, 2020, f.o.b. shipping point, which cost P 10,000, were not received by the customer until January 2021. The TVs were included in the ending inventory.

5. TVs on hand that cost P 6,100 were never recorded on the books.

Required -

1. Compute the correct inventory at December 31, 2020.