Question 1
Problem 1. LCS Enterprises is a wholesaler and retailer store. The following data is presented to
you.
Items currently being used for window display
Items in receiving department, refused due to damage
Items in the receiving dock, returned by the customer in good condition
Items in the shipping department
Items in the warehouse
Items included in count, damaged and unsalable
Items included in the count, but segregated per sales contract with a client
Items on counter for sale
Items ordered from a supplier in Manila and in the receiving department
Items ordered; invoice received but goods not received. Freight is on account of seller.
Items shipped today, invoice mailed, FOB destination
Items shipped today, invoice mailed, FOB shipping point
294,322
180,000
50,000
251,766
376,598
43,330
132,860
844,412
465,321
376,018
150,000
255,432
What is the correct amount of inventory?
Items currently being used for window display
Items in the receiving dock, returned by the customer in good condition
Items in the shipping department
Items in the warehouse
Items included in count, damaged and unsalable
Items included in the count, but segregated per sales contract with a client
Items on counter for sale
Items ordered from a supplier in Manila and in the receiving department
Items shipped today, invoice mailed, FOB destination
Inventory
₱294,322
50,000
251,766
376,598
(43,330)
(132,860)
844,412
465,321
150,000
₱2,256,229
Question 2
Problem 2. Mario Bros. took a physical inventory at the end of the year and determined that
P2,600,000 of goods were on hand. In addition, the entity determined that P200,000 of goods
purchased in transit shipped FOB shipping point were actually received two days after the physical
count and that the entity had P300,000 of goods out on consignment. What amount should be
reported as inventory at year-end?
Goods on hand
Goods purchased in transit FOB shipping point
Goods out on consignment
Inventory at year-end
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₱2,600,000
200,000
300,000
₱3,100,000
Question 3
Problem 3. Biker Company provided the following information at the end of the current year:
Finished goods in storeroom, at cost, including overhead of P400,000 or 20%
Finished goods in transit, including freight charge of P20,000, FOB shipping point
Finished goods held by salesman, at selling price, cost, P100,000
Goods in process, at cost of materials and direct labor
Raw materials
Raw materials in transit, FOB destination
Defective materials returned to suppliers
Shipping supplies
Gasoline and oil for testing finished goods
Machine lubricants
2,000,000
250,000
140,000
720,000
1,000,000
50,000
100,000
20,000
110,000
60,000
What is the correct amount of inventory?
Finished goods in storeroom, at cost, including overhead of P400,000 or 20%
Finished goods held by salesman, at selling price, cost, P100,000
Goods in process, at cost of materials and direct labor
Raw materials
Defective materials returned to suppliers
Gasoline and oil for testing finished goods
Machine lubricants
Inventory
Computation for Cost of Materials and Direct Labor
Finished goods in storeroom
100%
Cost of Overhead
(20%)
Cost of Materials and Direct Labor 80%
Computation for Goods in Process, at Cost of Materials and Direct Labor
Goods in Process
₱720,000
Cost of Materials and Direct Labor
x
80%
Goods in Process at Cost of Materials and Direct Labor
₱900,000
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₱2,000,000
100,000
900,000
1,000,000
100,000
110,000
60,000
₱4,270,000
Question 4
Problem 4. Rissa Inc. reported total assets of P1,200,000 and net income of P135,000 for the
current year. Rissa determined that inventory was overstated by P10,000 at the beginning of the
year (this was not corrected). Determine the corrected amount for the year of the following:
1. Total assets
Reported total assets ₱1,200,000
Total Assets
₱1,200,000
Question 5
Problem 4. Rissa Inc. reported total assets of P1,200,000 and net income of P135,000 for the
current year. Rissa determined that inventory was overstated by P10,000 at the beginning of the
year (this was not corrected). Determine the corrected amount for the year of the following:
2. Net income
Net Income
Overstated Inventory
Adjusted Net Income
₱135,000
10,000
₱145,000
Question 6
Problem 5. The following information is available for HRH Company for 2019:
Freight-in
P 30,000
Purchase returns
75,000
Selling expenses
150,000
Ending inventory
260,000
The cost of goods sold is equal to 400% of selling expenses. What is the cost of goods available
for sale?
Ending Inventory
Cost of Goods Sold (150,000 x 400%)
Cost of Goods Available for Sale
₱ 260,000
600,000
₱860,000
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Question 7
Problem 6. Covid Company used a perpetual inventory system. At the end of 2020, the inventory
account was P360,000 and P30,000 of those goods included in ending inventory were purchased
FOB shipping point and did not arrive until 2021. Purchases in 2021 were P3,000,000. The
perpetual inventory records showed an ending inventory of P420,000 for 2021. A physical count
at the end of 2021 showed an inventory of P380,000. Inventory shortages are included in cost of
goods sold. What amount should be reported as cost of goods sold for 2021?
Beginning Inventory
Purchases
Goods Available for Sale
Ending Inventory
Cost of Goods Sold
₱360,000
3,000,000
3,360,000
(380,000)
₱2,980,000
Computation for Beginning Inventory
Ending Inventory, 2020
₱360,000
Goods, FOB shipping point
30,000
Beginning Inventory
₱390,000
Question 8
Problem 7. On October 1, 2021, Cycle Company consigned 40 bicycles to Runner Company
costing P14,000 each for sale at P20,000 each and paid P16,000 in transportation costs. On
December 30, 2021, Runner reported sale of 10 bicycles and remitted P170,000. The remittance
was net of the agreed 15% commission. What mount should be recorded as consignment sales for
2021?
Remittance
Commission [(170,000 / 85%) x 15%]
Consignment Sales
₱170,000
30,000
₱200,000
Question 9
Problem 8. Bakers’ Pal regularly buys sacks of flour from Mill Company and is allowed trade
discounts of 20% and 10% from the list price. Bakers’ Pal made a purchase on March 20, 2021
and received an invoice with a list price of P600,000, a freight charge of P15,000 and payment
terms of 2/10, n/30. What is the cost of the purchase?
List Price
Trade Discount 20% (600,000 x 20%)
Balance
Trade Discount 10% (480,000 x 10%)
Invoice Price
Freight Charge
Discounted Price
₱600,000
(120,000)
₱480,000
(48,000)
₱432,000
15,000
₱447,000
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Question 10
Problem 9. A physical count conducted in the warehouse of Mercy Company on December 31,
2020 revealed merchandise with a total cost of P5,000,000. Further investigation revealed the
following items were excluded from the count:
 Goods sold to a customer, which are being held for the customer to call at the customer’s
convenience with a cost of P200,000.
 A package case containing product costing P500,000 was standing in the shipping room
when the physical inventory was taken. It was not included in the inventory because it was
marked “hold for shipping instructions.” The investigation revealed that the customer’s
order was dated December 28, 2020, but that the case was shipped and the customer billed
on January 4, 2021.
 A special machine costing P250,000, fabricated to order for a customer, was finished and
specifically segregated at the back part of the shipping room on December 31, 2020. The
customer was billed on that date and the machine was excluded from inventory although it
was shipped on January 2, 2021.
What is the correct amount of inventory that should be reported on December 31, 2020?
Total merchandise
Package case containing product
Correct amount of inventory
₱5,000,000
500,000
₱5,500,000
Question 11
Problem 10. Jaykie Company had the following transactions for 2021:
 Jaykie sold goods to a customer for P50,000, FOB shipping point on December 30, 2021.
 Jaykie sold three pieces of equipment on a contract over a 3-year period. The sales price of
each piece of equipment is P100,000. Delivery of each piece of equipment is on February
10 of each year. In 2021, the customer paid a P200,000 down payment and will pay
P50,000 per year in 2022 and 2023. Collectability is reasonably assured.
 On June 1, 2021, Jaykie signed a contract for P200,000 for goods to be sold on account.
Payment is to be made in two installments of P100,000 each on December 1, 2021 and
December 1, 2022. The goods were delivered on October 1, 2021. Collection is
reasonably assured, and the goods may not be returned.
 Jaykie sold goods to a customer on July 1, 2021 for P500,000. If the customer does not sell
the goods to retail customers by December 31, 2022, the goods can be returned to
Jaykie. The customer sold the goods to retail customers on October 1, 2022.
What amount of sales revenue should be reported in the 2021 income statement?
Computation of Sales Revenue
Goods sold – Dec. 30, 2021
Realized Revenue for Equipment sold on a contract
Goods sold on account – June 1, 2021 (collection - assured)
Sales Revenue
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₱ 50,000
100,000
200,000
₱350,000