Reference no: EM132744526

The balance sheet of Kuya Company shows a total inventory of Php 800,000 representing a physical inventory of all materials on the premises as of December 31, 2017 (raw materials, Php 250,000; work-in process, Php 350,000; finished goods, Php 200,000) based on the lower of cost or market. Raw materials inventory included factory supplies of Php 3,000 previously expensed in accordance with the company policy. Materials in transit (FOB shipping point) costing Php 12,000 were not included in the physical inventory at December 31, 2017, but the liability had been recorded prior to the year end. Material consigned by Ate Company was on hand and was included in the raw materials inventory of the company at Php 35,000. The audit of the raw materials inventory revealed errors of (1) items duplicated, Php 14,000; (2) items missed in counting, Php 5,000; and (3) extension and footing errors, Php 11,000 over valuation.

Work-in process included Php 200,000 applicable to a single contract which was 50% completed as to both labor and materials. The contract calls for a completed price of Php 416,000 plus applicable selling nd administrative expenses.

The company has not yet included manufacturing overhead in its inventories. Such cost for the current year amounts to approximately 10% of prime cost. The president agreed that overhead should be added to the value of the closing inventory.

Required:

Problem 1: The proper valuation for the raw materials inventory at December 31, 2017

Problem 2: The proper net valuation for the work-in process inventory at December 31, 2017