1. An entity reported the December 31, 2021 inventory at P2,500,000. The entity revealed the
following transactions:
• Goods shipped to the entity FOB destination on December 26, 2021 were received on
January2, 2022. The invoice cost of P300,000 is included in inventory balance.
• At the year-end, the entity held P250,000 of merchandise on consignment from another
entity. This merchandise is included in the inventory balance.
• At year-end, the entity had merchandise costing P150,000 out on consignment with the
anotherentity. The merchandise is not included in the inventory balance.
What amount should be reported as inventory on December
31,2021?a. 2,100,000
b. 2,200,000
c. 1,950,000
d. 2,500,000
2. An entity reported accounts payable of P4,000,000 on December 31, 2021 before considering
thefollowing data:
* Goods shipped to the entity on December 31, 2021 FOB shipping point were lost in transit.
Theinvoice cost of P100,000 was not recorded. On January 15, 2022, the entity filed a
P100,000 claim against the common carrier.
* On December 31, 2021, a vendor authorized the entity to return for full credit goods shipped
andbilled at P150,000 on December 15, 2021. The returned goods were shipped by the entity
on December 31, 2021. A P150,000 credit memo was received and recorded by the entity on
January 15, 2022.
* On December 31, 2021, the entity had a P500,000 debit balance in accounts payable to a
supplier resulting from an advance payment for goods to be manufactured to the entity’s
specifications.
What amount should be reported as accounts payable on December 31,
2021?a.
4,350,000
b.
3,950,000
c.
4,500,000
d.
4,450,000
An entity had 100,000 units of product A on hand at January 1, costing P20 each. A physical count on
January 31 showed 250,000 units of product A on hand. Purchases of product A during the month
of January were:
Units
Unit Cost
January 10
200,000
25
18
300,000
30
28
400,000
35
3. What is the cost of the inventory on January 31 under the FIFO method?
a. 8,500,000
b. 5,750,000
c. 5,000,000
d. 8,750,000
4. What is the cost of the inventory on January 31 under weighted average?
a. 7,500,000
b. 6,875,000
c. 5,625,000
d. 6,250,000
5. On December 31, 2021, an entity experienced a decline in the value of inventory resulting in a
writedown from P4,000,000 cost to P3,500,000 net realizable value. The entity used the allowance
method to record the necessary adjustment. In 2022, market conditions have improved
dramatically. On December 31, 2022, the inventory had a cost of P5,000,000 and net realizable
value of P4,800,000. The entity made purchases of P20,000,000 in 2022?
• What amount should be recognized as gain on reversal of inventory writedown in
2022? a. 200,000
b. 300,000
c. 500,000
d.
0
• What amount should be reported as cost of goods sold in
2022?a. 19,000,000
b. 19,300,000
c. 18,700,000
d. 24,000,000
An entity reported the following information about inventory:
Category
A
B
Category
C
D
Cost
NRV
LCNRV
2,500,000
1,700,000
2,800,000
1,500,000
2,500,000
1,500,000
2,000,000
1,900,000
1,600,000
1,800,000
1,600,000
1,800,000
1:
2:
6. What is the inventory measurement under LCNRV individual approach?
a. 7,600,000
b. 8,100,000
c. 7,700,000
d. 7,400,000
8.
What is the inventory measurement under the LCNRV total
approach?a. 8,100,000
b. 7,600,000
c. 7,400,000
d. 7,700,000
9.
b.
c.
d.
10.
What is the inventory measurement under the LCNRV category
approach?a. 7,400,000
7,700,000
8,100,000
7,600,000
An entity reported the following data during the current year:
Beginning inventory
Net purchases
Net sales
500,000
2,500,000
3,500,000
A physical count at year-end resulted in an inventory of P600,000. The gross profit had remained
constant at 40%. The entity suspected that some inventory may have been taken by a new
employee. What is the estimated cost of missing inventory at year-end?
a.
b.
c.
d.
600,000
900,000
450,000
300,000
At the end of current year, a fire damaged the warehouse and factory of an entity completely destroying the goods in
process inventory. There was no damage to either the raw materials or finished goods. The physical inventory
revealed the following.
January 1
1,700,000
4,300,000
6,000.000
500,000
Raw materials
Goods in process
Finished goods
Factory supplies
December 31
2,000,000
0
4,500,000
400,000
The gross profit margin historically approximated 30% of sales. The sales for the year amounted
to P20,000,000. Raw material purchases totaled P4,000,000. Direct labor costs amounted to
P5,000,000 and manufacturing overhead was applied at 60% of direct labor.
11. What is the cost of raw materials
used? a. 5,700,000
b. 3,700,000
c. 3,800,000
d. 3,600,000
12. What is the total manufacturing
cost?a. 13,000,000
b. 11,800,000
c. 11,700,000
d. 11,600,000
13. What is the cost of
manufactured?a. 12,500,000
b. 15,500,000
c. 16,000,000
d. 18,500,000
goods
14. What is the cost of goods
sold?a. 12,000,000
b. 16,000,000
c. 13,000,000
d. 14,000,000
15. What is the cost of the goods in process inventory destroyed in the
fire?a. 3,500,000
b. 3,800,000
c. 2,500,000
d. 1,500,000
An entity used the retail inventory method to approximate the ending inventory. The
followinginformation is available for the current year:
Beginning inventory
Purchases
Freight in
Purchase returns
Purchase allowances
Departmental transfer in
Cost
Retail
650,000
9,000,000
200,000
300,000
150,000
200,000
1,200,000
14,700,000
500,000
300,000
Net markup
Net markdown
Sales
Sales discounts
Employee discounts
Estimated normal shoplifting losses
Estimated normal shrinkage
16. What is the estimated cost of ending inventory using the conservative
approach?a. 2,400,000
b. 2,460,000
c. 3,060,000
d. 2,700,000
17. What is estimated cost of ending inventory using the average cost
approach?a.
2,560,000
b. 2,624,000
c. 3,264,000
d. 2,880,000
300,000
1,000,000
9,500,000
100,000
500,000
600,000
400,000