Inventory With Solution
Inventory With Solution
Pacers Company, a manufacturer of small tools, provided the following information fromits accounting records
for the year ended December 31, 2006:
QUESTIONS:
Based on the above and the result of your audit, answer the following:
1. The adjusted balance of Inventory as of December 31, 2006 is
P1,704,000
2. The adjusted balance of Accounts Payable as of December 31, 2006 is
P1,333,000
3. The adjusted Net Sales fro the year ended December 31, 2006 is
P8,063,000
Practice Set – Inventory CPAs by October 2020
On November 17, 2010, Bautista Airways entered into a non-cancellable commitment to purchase 3,000
barrels of aviation fuel for ₱9,000,000 on March 31, 2011. Bautista entered into a purchase commitment to
protect itself against volatility in the aviation fuel market. By December 31, 2010, the purchase price of aviation
fuel had fallen to ₱2,200 per barrel. However, by March 31, 2011, when Bautista took delivery of the 3,000
barrels, the price of aviation fuel had risen to ₱3,100 per barrel.
Based on the above and the result of your audit, answer the following:
Solution:
Solution:
At the beginning of January 1, Jay Company has 2,000 inventories costing 20 per unit. The following
chronological transactions transpired during the year:
1. What is the ending inventory and cost of goods sold using the periodic inventory method?
2. What is the ending inventory and cost of goods sold using the perpetual inventory method?
3. Prepare all necessary journal entries using the perpetual and periodic method
Answers:
Inventory - Perpetual
B, Inv Sales
40,000 50,000 2
Purchase 60,000 5
1 60,000
Bal.
3 80,000 70,000 end
180,000 180,000
COGS on Sale
2 50,000
5 60,000
Bal.
110,000 End
110,000
A bookkeeper has provided you with the following information regarding inventory on hand at December 21,
2018, used in manufacture of two product lines: motorbikes and bicycles:
Practice Set – Inventory CPAs by October 2020
Cost NRV: if sold ‘as NRV: if sold as a
is” completed
product
Raw Materials: ₱100,000 ₱45,000 ₱65,000
Supply of steel (used for 40,000 25,000 15,000
motorbikes)
Supply of aluminum (used for 60,000 20,000 50,000
bicycles)
The lifecycle of both product lines is coming to an end and the company has decided that where it is more
profitable to sell a class of inventory such as raw materials ‘as is’ than to convert it into finished product, then
the class of inventory will be sold ‘as is’. Cost of sales before any adjustments to the cost of inventory was
₱450,000.
Solution:
Motorbikes Write-down
Cost 80,000
More profitable (completed products) 60,000 20,000
Bicycles
Cost 80,000
More profitable (completed products) 110,000 -
Total write down 20,000
3.
Records of Mckenzhy New Products Co. show the following data relative to Product 143:
Question:
1. Using the weighted average method, how much is the cost of the inventory at the end of April?
2. Using the weighted average method, how much is the cost of goods sold in April?
Practice Set – Inventory CPAs by October 2020
3. Using the moving average method, how much is the cost of the inventory at the end of April?
4. Using the moving average method, how much is the cost of goods sold in April?
5. Using the perpetual FIFO method, how much is the cost of inventory at the end of April?
6. Using the perpetual FIFO method, how much is the cost of goods sold in April?
7. Using the periodic FIFO method, how much is the cost of inventory at the end of April?
8. Using the periodic FIFO method, how much is the cost of goods sold in April?
Solution:
Questions 1 and 2
Weighted average
Weighted Average unit cost = Total goods available for sale ( in peso value)
Total goods available for sale (in units)
=1,105,000/ 85,000
Questions 3 and 4
Moving Average
FIFO
Question 7 and 8
Cost of Goods Sold and Inventory under FIFO periodic and perpetual is the same.
On March 31, 2010 San Fabian Company had a fire which completely destroyed the factory building and inventory
of goods in process some of the equipment was saved. After the fire, a physical inventory was taken. The material was
valued at P750,000 and the finished goods at P620.000. The inventories on January 1, 2010 consisted of:
The sales for the first three months of 2010 were 3,000,000. Material purchases were P1,250,000, transportation
on purchases was P100,000 and direct labor cost for the three months was P1,000,000. For the past two years, factory
overhead cost has been 80% of direct labor cost.
Practice Set – Inventory CPAs by October 2020
QUESTIONS:
Based on the above and the result of your audit, compute the following:
1. The most likely gross profit rate to be used in estimating the inventory of goods in process destroyed by fire.
Solution:
Questions 2-4
Question:
1. How much is the estimated cost of Ending inventory under Conventional, Average and FIFO Method?
2. How much is the Cost of Sales under Conventional, Average and FIFO Method?
Solution: