Inventories Comprehensive Exercise
Inventories Comprehensive Exercise
The physical count revealed the following ending quantities for the three (3) items sold by
ABC: Item A, 220 units; Item B, 641 units; and Item C, 343 units.
The unit costs of Items A, B, and C are P42, P94, and P50, respectively. Careful inspection
of the related documents revealed that 38 items of Item B included in the physical count
pertain to EFG Company and are only held on consignment by ABC.
a. Determine the amount of inventory shortage/overage and provide the necessary adjusting
entry (if any).
5. Thor Corporation only has one product, the Mjolnir. The following information pertain to the
month of October 2019, unless otherwise stated:
Budgeted production is at 6,000 units. Actual production for the month was at 5,000 units.
Assume zero beginning inventory and that all items put in production were completed. Assume
further that 10% of production for the month remained in inventory at month-end.
Date Particulars Units Unit Cost Total Cost Sales (in units)
Jan.
1 Beginning balance 350 180 63,000
3 Sale 320
7. The inventory items of ATOD Corporation, a manufacturing company, are shown below:
a. What is the total net realizable value to be shown in the Inventories account?
8. On June 1, 2019, Entity A entered into a noncancelable purchase commitment with Entity B
whereby the former would buy merchandise from the latter at a fixed contract price of
P300,000 on June 30, 2019. What would be the cost of inventories (purchases) if:
9. XYZ Corporation is a manufacturing entity. Its only product is Item A. The raw materials for
this item carry a unit cost of P40 while conversion costs are P20 per unit. The finished product
(Item A) is sold to customers for P80 each.
Cost Retail
Beginning inventory 221,770 275,060
Net purchases 1,412,630 2,129,900
Additional markup 308,000
Markup cancelation 91,050
Markdwon 100,400
Markdown cancelation 50,200
Sales 3,852,400
Sales return 25,500
Sales allowance 15,200
Saldes discount 65,870
Employee discount 32,940
Spoilage and breakage 26,350
a. Compute for the cost of sales using the conservative cost method.
b. Compute for the cost of sales using the average cost method.