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# 1.

FIFO METHOD

Cindy Sheppard runs a candy shop. She enters into the following transactions
during July:

## July 1 Purchases 1,200 lollipops at \$1 each.

July 13 Purchases 500 lollipops at \$1.20 each.
July 14 Sells 700 lollipops at \$2 each.

First of all, how many lollipops does she have at the end of the month?

1,200 + 500 700 = 1,000 lollipops

## DATE DETAILS NUMBER UNIT VALUE

July 1 Purchased 1,200 1,200 1 1,200
lollipops at 1
each
July 13 Purchased 500 1,500 1 1,500
lollipops at 1.20 500 1.20 600
each 2000 n/a 2,100
July 14 Sells 700 500 1 500
lollipops at 2 500 1.20 600
each 1,000 n/a 1,100

Using the First-In-First-Out method, our closing inventory comes to \$1,100. This equates to
a cost of \$1.10 per lollipop (\$1,100/1,000 lollipops).
2. LIFO METHOD

This method assumes that the last inventories bought are the first ones to be sold,
and that inventories bought first are sold last.

The value of our closing inventories in this example would be calculated as follows:

## DATE DETAILS NUMBER UNIT VALUE

July 1 Purchases 1,200 1,200 1 1,200
lollipops at 1
each
July 13 Purchases 500 1,500 1 1,500
lollipops at 500 1.20 600
1.20 each 2000 n/a 2,100
July 14 Sells 700 1,000 1 1000
lollipops at 2 0 1.20 0
each 1,000 n/a 1000

Using the Last-In-First-Out method, our closing inventory comes to \$1,000. This equates to
a cost of \$1.00 per lollipop (\$1,000/1,000 lollipops).

## Age of Account Category Estimated Estimated

Dollar Uncollectible Uncollectible
Amount Percentage Dollar Amount
Less than 30 days P2,700,000 5% P135,000
31-60 days P1,800,000 3% P54,000
61-90 days P1,300,000 8% P104,000
91-120 days P800,000 6% P48,000
Greater than 120 days P200,000 9% P18,000
Total P6,800,00 P359,000