Punzalan, Hazel P. Exercises E 2-1 Items considered as Inventories 1) YES 2) YES 3) YES 4) YES 5) YES 6) YES 7) NO 8) NO 9) YES 10) YES E 2-5 Items included in cost Purchase of Raw Materials Import duty and non-refundable taxes Freight cost, bringing eme Cost of unloading material Packaging Less: Rebate Total Cost of Purchase Salary of machine workers, factory Salary of factory supervisor Depreciation on factory bldg. & equipt. Consumable used in production process Depreciation of vehicles, transport Factory electricity usage charges Factory rental Depreciation and maintenance Add: 20% of Admin. Expense (admin. the factory) (50k+15k+305,000)20% Total Cost of Conversion E 2-3 Transactions affecting Inventories 11) YES 12) YES 13) NO 14) NO 15) YES 16) NO 17) NO 18) NO 19) YES 20) YES Inventory, Beg. Purchases Less: Purchase Returned Less: Sales, excluding Sales Consignee Add: Sales returned, good condition Total Inventory, end of the period 3,000,000.00 800,000.00 300,000.00 2,000.00 200,000.00 53,000.00 ₱4,249,000.00 500,000.00 300,000.00 60,000.00 20,000.00 40,000.00 30,000.00 100,000.00 20,000.00 ₱1,070,000.00 74,000.00 ₱1,144,000.00 100,000.00 900,000.00 10,000.00 ₱990,000.00 750,000.00 42,000.00 8,000.00 ₱206,000.00 E 2-7 Lower of cost and NRV Items Cost NRV Coats ₱32,000.00 ₱28,500.00 Skirts 16,000.00 17,600.00 Total ₱48,000.00 ₱46,100.00 Inventory, End ₱ 502,000.00 Less: Total amount LCNRV 1) Total Inventories 000000025.00 ₱ 501,975.00 Total Cost Less: LCNRV Required allowance for writedown to NRV Less: Recorded allowance for write-down to NRV 2) Amount of Reversal of writedown to NRV 502.00 477.00 25.00 000033,000.00 ₱ 32,975.00 Multiple Choice Problems MCP 2-1 Items included in Inventories Answer: D ₱150,000 Inventory ₱176,000.00 Less: Direct materials, FOB Destination 12,000.00 Prepaid Insurance 2,000.00 Goods shipped on consignment (15k*80) 12,000.00 Total ₱150,000.00 MCP 2-3 Answer: D ₱2,686,000.00 Closed inventory Goods sold, FOB Destination Purchased goods, FOB Seller Goods out on consignment Adjusted Inventory, Dec. 31 MCP 2-5 Answer: B ₱1,039,300 Inventory on hand c. Goods sold to Garcia Corp. (18,500 - 1,000) /1.40 d. Purchased Goods, FOB Origin (48k+3k) e. Goods out on consignment (36,400/1.40 + 2,000) Adjusted Inventory, Dec.31 ₱2,580,000.00 22,000.00 41,000.00 43,000.00 ₱2,686,000.00 ₱947,800.00 ₱12,500.00 ₱51,000.00 ₱28,000.00 ₱1,039,300.00 2) Answer: B ₱150,080.00 Date 1-Jul 7-Jul 12-Jul 21-Jul 22-Jul 29-Jul Transaction Inventory Purchase Sales Purchase Sales Purchase Units Cost 2,000 36 3,000 37.2 3,600 4,800 38 3,800 1,600 38.6 ₱4,000.00 Weighted Average Method (4,000*37.52) ₱150,080.00 Total Cost ₱72,000.00 111,600.00 182,400.00 61,760.00 ₱427,760.00 WAUC 427,760.00/11,400 37.52 Solution to ₱11,400: Sales Balance 2,000.00 3,000.00 4,800.00 1,600.00 ₱11,400.00 MCP 2-7 Answer: B ₱ 20,720.00 Purchases Date 1-Jan 6-Jan 2,000.00 7-Jan 26-Jan 2,700.00 31-Jan Unit Cost Total Cost 10.30 20,600.00 Units Unit Cost 2,500.00 9.98 10.71 28,917.00 3,200.00 10.36 Total Cost Units 3,000.00 5,000.00 24,955.00 2,500.00 5,200.00 33,152.00 2,000.00 Unit Cost 9.77 9.98 9.98 10.36 10.36 Total Cost 29,310.00 49,910.00 24,955.00 53,872.00 20,720.00 MCP 2-8 Answer: D None of the above since the others choices are correct Product A Product B Total Value of Inventory Held, End (Add: Total of A and B) Units Held 2,000.00 5,000.00 Selling Price 2.00 20.00 Total 4,000.00 100,000.00 ₱104,000.00 MCP 2-10 Answer: C ₱92,000.00 General selling Price Less: Estimated costs to sell Total ₱12.00 3.00 9.00 Units (10,000-2,000) Total of Price Total (Units*₱9) 8,000.00 9.00 ₱72,000.00 Units of 2,000 that binding contract to sell Cost Total (2k*10) ₱2,000.00 10.00 ₱20,000.00 Total Units of Price Add: Total units of binding Total ₱72,000.00 20,000.00 ₱92,000.00 MCP 2-12 Answer: D A credit to Cash of ₱15,617.00 Purchased, Dec. 3 Discounts 3/10, n/20 Total (Purchased*Discounts) ₱8,600.00 0.03 ₱258.00 Purchased, Dec. 3 Less: Total Discounts Total Amount ₱8,600.00 258.00 ₱8,342.00 Purchased, Dec. 10 Discounts 3/10, n/30 Total (Purchased*Discounts) ₱7,500.00 0.03 ₱225.00 Purchased, Dec. 10 Less: Total Discounts Total Amount ₱7,500.00 225.00 ₱7,275.00 Total Amount on Dec. 3 Add: Total Amount on Dec. 10 Total Payment, Dec. 16 ₱8,342.00 7,275.00 ₱15,617.00 Multiple Choice Theories MCP 2-15 Answer: C ₱2,000,000.00 Units Per Unit Total Value Less: Obsolete (250k*2) Total Probable Loss ₱250,000.00 10.00 ₱2,500,000.00 500,000.00 ₱2,000,000.00 1) C 2) D 3) A 4) D 5) A 6) A 7) D 8) D 9) D 10) D 11) B 12) D 13) D 14) C 15) A 16) D 17) D 18) A 19) D 20) D 21) D 22) C 23) A 24) C 25) D 26) A 27) D 28) A 29) D 30) D