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INVENTORIES
PROBLEMS
FIFO
Cost of ending inventory:
275 x 11.75 3,231.25
25 x 11.00 275.00 3,506.25
Gross profit:
Sales 6,505.00
Less cost of goods sold 4,550.00 1,955.00
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Weighted average
Cost of ending inventory:
Cost of goods available for sale 8,056.25
Number of units available for sale 725
Weighted average cost per unit 11.11
Units in ending inventory x 300 3,333.00
Gross profit:
Sales 6,505.00
Less cost of goods sold 4,726.25 1,778.75
Moving average
Cost of ending inventory:
Inventory, January 1 250 x 10.50 = 2,625.00
Purchase, March 7 200 x 11.00 = 2,200.00
Total 450 x 10.72 = 4,825.00
Sale, May 20 (120 x 10.72 = 1,286.40)
Sale, June 30 ( 55 x 10.72 = 589.60)
Balance 275 x 10.72 = 2,949.00
Purchase, July 15 275 x 11.75 = 3,231.25
Total 550 x 11.24 = 6,180.25
Sale, September 17 (250 x 11.24 = 2,810.00)
Balance 300 x 11.24 = 3,370.25
Gross profit:
Sales 6,505.00
Less cost of goods sold 4,686.00 1,819.00
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(b)
Product X Product Y
Sales price (effective 2014) 90% x previous SP P135.00 P111.60
Estimated selling cost (13.50) (11.16)
Net realizable value P121.50 P100.44
Lower of cost and net realizable value, per unit P121.50 P98
Number of units in ending inventory 2,900 units 1,000 units
Inventory value at lower of cost and NRV P352,350 P98,000
Total inventory value at December 31, 2013 352,350+98,000 = P450,350
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4-18.
Estimated cost of goods sold (705,000 18,000)/ 1.20 P572,500
Add Inventory at July 20, 2013 205,000
Cost of goods available for sale P777,500
Less net purchases for the period (650,000 12,000 + 6,000) 644,000
Estimated cost of June 30, 2013 inventory P133,500
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(2) FIFO retail (exclude the beginning inventory in computing the cost ratio)
337,680/469,000 = 72%
Ending inventory at FIFO cost 72% x P290,000 = P208,800
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Purchases 1,150,000
Estimated Liability on Purchase Commitments 50,000
Accounts Payable 1,200,000
(b)
Dec. 31, 2013
Loss on Purchase Commitments 50,000
Estimated Liability on Purchase Commitments 50,000
1,000 x (1,200 1,150)
Problems
MC22 D 90,000 x .80 x ..90 = 64,800; 64,800 + 5,000 = 69,800
MC23 C 150,000 x .85 x .90 x .95 = 109,012.50
MC24 A 109,012.50 x .98 = 106,832.25
MC25 B 3,280,000 + 900,000 80,000 = 4,100,000 x 3% =123,000; 123,00027,000=96,000
MC26 D 1,500,000 + 50,000 = 1,550,000
MC27 B (b) 450,000 1.5 = 300,000; (d) 600,000 + 60,000 = 660,000
300,000 1.5 = 200,000 + 30,000 = 230,000
3,000,000 + 300,000 + 660,000 + 230,000) = 4,190,000
MC28 C 5,000,000 + 80,000 + 800,000 25,000 = 5,855,000
MC29 B 77,500 + 6,000 = 83,500
MC30 C 550,000 + 90,000 + 380,000 + 450,000 + (150,000 x .80) = 1,590,000
MC31 C 104,000 1.3 = 80,000; 80,000 x .30 = 24,000
24,000 + 56,000 + (32,500 25,000) = 87,500
MC32 A (3,000 x 35) + (2,000 x 36) + (1,000 x 37) = 214,000 Sales
(4,000 x 25) + (2,000 x 26) = 152,000 CGS; 214,000 152,000 = 62,000
MC33 C (1,600 x 8) + (4,800 x 9.60) = 58,880; 58,880 6,400 = 9.20
MC34 B Confidence: cost 22; NRV = 30 3 = 27; lower is 22
Positive attitude: cost 55; NRV = 80 28 = 52; lower is 52
MC35 C (1,000 x 25)+(2,000 x 36)+(3,000 x 120) +(4,000 x 18) =529,000
MC36 C 600,000 + 1,500,000 (2,240,000 1.4) = 500,000
MC37 C 2,550,000 + 250,000 300,000 = 2,500,000 Purchases
2,800,000 + 900,000 700,000 = 3,000,000 Sales
3,000,000 1.25 = 2,400,000 CGS
180,000 + 2,500,000 2,400,000 = 280,000; 280,000 110,000 =170,000 short
MC38 B CGS-2011 = 1,040,000; CGS-2012 =1,550,000; total CGS (2011 and 2012) = 2.59M
2011 and 2012 sales = 1,700,000 + 2,000,000 = 3,700,000; 2.59/3.7 = 70%
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