Professional Documents
Culture Documents
SUMMARY OF PROBLEMS
PROBLEM NO. 1 Computation of adjusted inventory
PROBLEM NO. 2 Computation of adjusted inventory and related accounts
(including preparation of adjusting entries)
PROBLEM NO. 3 Computation of adjusted inventory and related accounts
(including preparation of adjusting entries)
PROBLEM NO. 4 Effect of inventory errors on SFP and SCI items
(including preparation of adjusting entries)
PROBLEM NO. 5 Effect of inventory errors on SFP and SCI items
(including preparation of adjusting entries)
PROBLEM NO. 6 Cost flow assumptions
PROBLEM NO. 7 Measurement of inventory and inventory shortage
PROBLEM NO. 8 Write down of inventory to net realizable value
PROBLEM NO. 9 Inventory estimation
PROBLEM NO. 10 Inventory estimation
PROBLEM NO. 11 Roll-forward analysis
PROBLEM NO. 12 - Theory
2,348,900
134,200
85,400
(104,380)
(105,200)
15,000
2,373,920
Accts. Payable
980,000
586,000
10,048,000
(9,000)
50,000
(15,000)
71,000
30,000
32,000
21,000
27,000
3,000
1,190,000
(9,000)
71,000
56,000
6,000
710,000
(40,000)
(47,000)
-
Requirement No. 2
a) Accounts payable
Inventory
Sales, net
9,000
9,000
b) Inventory
P/L summary (Cost of sales)
50,000
c) Sales
Acccounts receivable
40,000
15,000
e) Inventory
Accounts payable
71,000
f) Inventory
P/L summary (Cost of sales)
30,000
g) Inventory
P/L summary (Cost of sales)
Sales returns
Acccounts receivable
32,000
h) Inventory
P/L summary (Cost of sales)
21,000
i) Inventory
P/L summary (Cost of sales)
27,000
56,000
50,000
40,000
15,000
71,000
30,000
32,000
47,000
47,000
21,000
27,000
56,000
9,961,000
k) Inventory
P/L summary (Cost of sales)
Accounts payable
3,000
3,000
6,000
Sales
Per books
5,530,000
Accounts receivable
500,000
Inventory
600,000
Accounts payable
Purchases
400,000
3,000,000
1
5
1
5
3
4
6
2
2
Adjustments
Inc.(Dec.)
(130,000)
(150,000)
(130,000)
(150,000)
64,000
80,000
120,000
18,000
18,000
Per audit
5,250,000
220,000
864,000
418,000
3,018,000
18,000
3 Inventory
P/L summary (Cost of sales)
To take up goods under RR No. 1063
64,000
4 Inventory (P100,000/1.25)
P/L summary (Cost of sales)
To take up unshipped goods under SI No. 968
80,000
18,000
64,000
80,000
5 Sales
Accounts receivable
To reverse enrty made to record SI No. 966
150,000
6 Inventory (P150,000/1.25)
P/L summary (Cost of sales)
To take up goods under SI No. 966
120,000
150,000
120,000
a
b
c
d
e
f
Sales
Purchases
Inventory
COS
Effect on Profit Effect on WC
over (under) over (under) over (under) over (under) over (under)
over (under)
(180,000)
180,000
(180,000)
(180,000)
(300,000)
200,000
(200,000)
(100,000)
(100,000)
150,000
150,000
600,000
(400,000)
400,000
200,000
200,000
250,000
(250,000)
250,000
250,000
(160,000)
160,000
(160,000)
(160,000)
300,000
150,000
(140,000)
290,000
Requirement No. 2
a) Inventory
Cost of sales
180,000
b) Accounts receivable
Sales
Cost of sales
Inventory
300,000
c) Accounts payable
Inventory
150,000
d) Sales
Accounts receivable
Inventory
Cost of sales
600,000
e) Cost of sales
Inventory
250,000
f) Inventory
Cost of sales
160,000
180,000
300,000
200,000
200,000
150,000
600,000
400,000
400,000
250,000
160,000
10,000
10,000
f)
g)
h)
Cost of sales
Inventory
None
None
Sales
Accounts receivable
Sales
Accounts receivable
Inventory
Cost of sales
Accounts receivable
Sales
None
Accounts receivable
Sales
Cost of sales
Inventory
100,000
100,000
Inventory
Sales
COS
Profit
AR
WC
over (under) over (under) over (under) over (under) over (under) over (under)
(100,000)
100,000
100,000
100,000
200,000
200,000
200,000
500,000
500,000
200,000
500,000
500,000
280,000
200,000
200,000
500,000
500,000
(280,000)
(300,000)
(300,000)
(600,000)
(600,000)
(280,000)
280,000
280,000
(280,000)
300,000
300,000
(300,000)
(300,000)
600,000
(600,000)
(600,000)
475,000
600,000
475,000
(475,000)
475,000
475,000
295,000
475,000
(200,000)
(295,000)
95,000
(200,000)
95,000
Units UC
350 820
43 850
(300)
5
55 910
76 960
(86)
(1) 910
(60)
72 980
154
TC
###
36,550
50,050
72,960
(910)
70,560
###
FIFO
Composition of inventory, 12/31
Date
Units UC
TC
Dec. 26
72 980 70,560
Dec. 10
76 960 72,960
Dec. 9
6 910
5,460
Total
154
###
Inventory, 12/1
Net Purchases
Total goods available fo
Inventory, 12/31
Cost of sales
###
###
###
###
###
Moving average
Date
Purchased
Units UC
TC
Units
COS
UC
TC
Dec. 1
Dec. 2
Dec. 3
Dec. 9
55
910
50,050
Dec. 13
76
960
72,960
Dec. 15
Dec. 16
Dec. 22
Dec. 26
300
(5)
(1)
72
910
980
823
823
246,900
(4,115)
86
890
76,540
60
890
53,400
(910)
70,560
###
372,725
Units
Balance
UC
TC
350
43
393
93
98
98
55
153
153
820
850
823
823
823
823
910
855
855
287,000
36,550
323,550
76,650
80,765
80,765
50,050
130,815
130,815
76
229
143
142
82
82
72
154
960
890
890
890
890
890
980
932
72,960
203,775
127,235
126,325
72,925
72,925
70,560
143,485
Sales returns
Perpetual balance
Inventory shortage (squeeze)
Physical count
Plain flour
Balance, June 1
Purchase 03 June
Purchase 15 June
Purchase 29 June
Sales (95,000 boxes)
Perpetual balance
Damaged goods
Goods in transit
Physical count
Quantity
35,000
20,000
47,000
(35,000)
(20,000)
(18,000)
5,000
34,000
(1,400)
32,600
Price
19.60
19.50
19.70
19.60
19.50
19.70
19.70
19.70
19.70
19.70
Amount
686,000
390,000
925,900
(686,000)
(390,000)
(354,600)
98,500
669,800
(27,580)
642,220
Quantity
62,500
15,000
20,000
24,000
(62,500)
(15,000)
(17,500)
26,500
(1,000)
(24,000)
1,500
Price
38.40
38.45
38.45
39.00
38.40
38.45
38.45
38.45
38.45
39.00
38.45
Amount
2,400,000
576,750
769,000
936,000
(2,400,000)
(576,750)
(672,875)
1,032,125
(38,450)
(936,000)
57,675
Cost
642,220
57,675
NRV
945,400
57,750
LCN
642,220
57,675
699,895
Requirement No. 2
Baked beans
Plain flour
Total
Quantity
32,600
1,500
A
65,000
30,000
95,000
(45,000)
50,000
Requirement No. 1
Item
Units in
Ending
Inventory
(FIFO)
Unit cost
Total cost
NRV
LCN
Inventory Allowanc
Total NRV at LCN
e
Product C
30,000
15,000
45,000
8.00
6.50
240,000
97,500
337,500
7.20
7.20
0.72
0.72
6.48
6.48
6.48
6.48
194,400
97,200
291,600
194,400
97,200
291,600
45,600
300
45,900
Product P
25,000
10.50
262,500
9.90
0.99
8.91
8.91
222,750
222,750
39,750
Product A
30,000
20,000
50,000
1.25
0.90
37,500
18,000
55,500
1.80
1.80
0.18
0.18
1.62
1.62
1.25
0.90
48,600
32,400
81,000
37,500
18,000
55,500
595,350
569,850
655,500
(a) Existing selling price x .9
(b) Amount in letter (a) x .1
Requirement No. 2
Item
Total cost
Inventory
at LCN
Allowance
(a)
337,500
262,500
55,500
655,500
291,600
222,750
55,500
569,850
45,900
39,750
85,650
Product C
Product P
Product A
85,650
(3,000)
82,650
Requirement No. 3
Inventory, 7/1 (at cost)
Purchases:
Product C [(70,000 units x P6.50)+(30,000 units x P8)
Product P (45,000 units x P10.50)
Product A (30,000 units x P1.25)
Total goods available for sale
Inventory, 7/31 (at cost)
Cost of sales before loss on inventory writedown
Loss on inventory writedown
Cost of sales including loss on inventory writedown
658,500
695,000
472,500
37,500
1,205,000
1,863,500
(655,500)
1,208,000
82,650
1,290,650
Alternative computation:
Inventory, 7/1 (at LCN) (P658,500 - P3,000)
Purchases:
Product C [(70,000 units x P6.50)+(30,000 units x P8)
Product P (45,000 units x P10.50)
Product A (30,000 units x P1.25)
655,500
695,000
472,500
37,500
1,205,000
85,650
1,860,500
(569,850)
1,290,650
Purchases
Purchases
Up to Nov. 30 Up to Dec. 31
1,425,000
10,125,000
12,000,000
(82,500)
-
112,500
(15,000)
(30,000)
###
###
(22,500)
(30,000)
-
1,342,500
10,110,000
11,947,500
Inventory, January 1
Add - Net purchases up to Nov. 30
Total goods available for sale
Less - Inventory, Nov. 30
Cost of sales for 11 months
1,312,500
10,110,000
11,422,500
1,342,500
10,080,000
12,600,000
(10,080,000)
2,520,000
12,600,000
20.00%
1,312,500
11,947,500
13,260,000
11,400,000
150,000
11,550,000
1,710,000
750,000
520,000
34,000
106,000
(9,500)
35,000
23,000
650,500
1,400,500
830,500
570,000
58,000
512,000
1,350,000
360,000
80,000
120,000
560,000
400,000
160,000
1,510,000
0.55
830,500
660,000
5,150,000
(750,000)
5,060,000
9,200,000
0.55
1,695,960
84,000
1,779,960
(61,600)
4,200
(7,000)
1,715,560
Requirement No. 2
Adjusted balance of inventory, 11/30
Purchases
Direct labor
Factory overhead (200% of direct labor)
Total
Less cost of sales:
Per books
Obsolete materials written off through COS
Inventory, 12/31
1,715,560
691,600
338,800
677,600
3,423,560
1,920,800
(7,000)
Requirement No. 3
Inventory, 11/30 (see no. 1)
Direct labor
Factory overhead (200% of direct labor)
Raw materials, 11/30
Purchases
Total
Less: Materials included in cost of sales
Adjusted cost of sales (see no. 2)
1,913,800
Direct labor
(386,400)
Factory overhead
(772,800)
Cost of materials on hand and materials included in WIP
Labor cost in the WIP:
Labor included in 11/30 inventory
280,000
Labor incurred in December
338,800
Total
618,800
Labor included in COS
(386,400)
Applied factory overhead (200% of direct labor)
Total, as shown in no.2
1,913,800
1,509,760
1,715,560
(280,000)
(560,000)
875,560
691,600
1,567,160
754,600
812,560
232,400
464,800
1,509,760
D
A
B
B
C
C
B
D
C
C
C
A