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PROBLEM NO. 1 - Pasay Company

Inventory Accts. Payable Sales
Unadjusted balances 400,000 167,500 5,000,000
Add (deduct) adjustments:
No. 1 - Goods held on consignment (9,000) (9,000) -
No. 2 - Constructive delivery of goods (15,000) - -
No. 3 - Goods sold FOB destination 11,000 - -
No. 4 - Goods out on consignment 50,000 - -
No. 5 - Goods purchased FOB shipping point 8,000 8,000
Adjusted balances 445,000 166,500 5,000,000

PROBLEM NO. 3 - Makati Company

Inventory Effect on NI
over (under)
Unadjusted balance 1,605,000
Add (deduct) adjustments:
a - Goods on consignment with a customer 110,000 (110,000)
b - Goods purchased FOB shipping point 87,000 -
c - Goods sold FOB shipping point (85,000) (17,000)
d - Goods sold FOB destination 26,000 (26,000)
e - Goods purchased FOB destination - (35,000)
f - Goods held on consignment - -
g - Goods sold FOB destination 37,000 (37,000)
Adjusted balances 1,780,000 (225,000)

PROBLEM NO. 4 - Manila Company

a) Cost of sales 100,000

Inventory 100,000
b) None
c) None

d) Sales 200,000
Accounts receivable 200,000
e) Sales 500,000
Accounts receivable 500,000
Inventory 280,000
Cost of sales 280,000
f) Accounts receivable 300,000
Sales 300,000
g) None
h) Accounts receivable 400,000
Sales 400,000
Cost of sales 275,000
Inventory 275,000
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PROBLEM NO. 5 - Taguig Company

Balance, December 26 1,965,000
Add on physical inventory:
Purchases - placed in stock 120,000
Purchases - FOB shipping point 50,000
Sales return on 12/29 (36,000/1.2) 30,000 200,000
Total 2,165,000
Deduct from physical inventory:
Purchase return on 12/28 8,000
Sales (600,000/1.2) 500,000 508,000
1,657,000
OR
Balance, December 26 (beginning) 1,965,000
Add net purchases:
Purchases - placed in stock 120,000
Purchases - FOB shipping point 50,000
Purchase return on 12/28 (8,000) 162,000
Total goods available for sale 2,127,000
Deduct cost of sales:
Sales 600,000
Sales return on 12/29 (36,000)
Net sales 564,000
Divide by 1.2 470,000
Inventory, 12/31/05 1,657,000

PROBLEM NO. 6 - Mandaluyong Company

Requirement no. 1
Inventory Purchases Purchases
Nov. 30 Up to Nov. 30 Up to Dec. 31
Unadjusted balances 1,425,000 10,125,000 12,000,000
Add (deduct) adjustments:
a - 112,500 -
b - (15,000) (22,500)
c - (30,000) (30,000)
d (82,500) (82,500) -
e - - -
1,342,500 10,110,000 11,947,500

Inventory, January 1 1,312,500

Add - Net purchases up to Nov. 30 10,110,000
Total goods available for sale 11,422,500
Less - Inventory, Nov. 30 1,342,500
Cost of sales for 11 months 10,080,000

Sales for 11 months ended Nov. 30 12,600,000

Cost of sales for 11 months ended Nov. 30 (10,080,000)
Gross profit 2,520,000
Divide by sales for 11 months ended Nov. 30 12,600,000
Gross profit rate for 11 months ended Nov. 30 20.00%
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Requirement no. 2
Sales for the year ended Dec. 31 14,400,000
Sales for 11 months ended Nov. 30 12,600,000
Total sales for the month of December 1,800,000
Sales without profit (150,000)
Sales with profit 1,650,000

Cost of sales with profit (1,650,000 x 80%) 1,320,000

Cost of sales without profit 150,000
Cost of sales for the month of December 1,470,000

Requirement no. 3
Inventory, January 1 1,312,500
Add - Purchases for the year ended Dec. 31 11,947,500
Total goods available for sale 13,260,000
Less - Cost of sales
Cost of sales with profit [(14,400,000 - 150,000) x 80%] 11,400,000
Cost of sales without profit 150,000 11,550,000
Estimated inventory, December 31, 2004 1,710,000

PROBLEM NO. 7 - Muntinlupa Company

1B
2B
Sales up to March 31, 2005 1,350,000
Sales for the period April 1 to 21
Accounts receivable, 4.21.05 360,000
Accounts receivable for write-off 80,000
Receipts from customers (P129,500 - P9,500) 120,000
Total 560,000
Less Accounts receivable, 3.31.05 400,000 160,000
Total sales 1,510,000
3A
4A
5B
6A
7D
Inventory, December 31, 2004 750,000
Add purchases for the period Jan. 1 to April 21
Purchases up to March 31, 2005 520,000
Payments for April purchases 34,000
Unrecorded obligations for April purchases 106,000
Purchase returns (9,500) 650,500 (4)
Total goods available for sale 1,400,500
Less cost of goods sold (P1,510,000 x 55%*) 830,500 (5)
Estimated inventory on the date of fire 570,000 (6)
Less: Proceeds from sale of salvaged merchandise 35,000
Shipments in transit 23,000 58,000
Inventory fire loss 512,000 (7)
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PROBLEM NO. 8 - Parañaque Company

Raw materials, 1/1/05 60,000

Purchases 200,000
Freight-in 30,000
Raw materials available for use 290,000
Less raw materials, 6/1/05 120,000
Raw materials used 170,000 1) D
Direct labor 160,000
Factory overhead (P160,000/160%) 100,000
Total manufacturing cost 430,000
Work-in-process, 1/1/05 200,000
Total cost placed in process 630,000 2) C
Less work-in-process, 6/1/05 (squeeze) 265,000 4) D
Cost of goods manufactured 365,000 3) A
Finished goods, 1/1/05 280,000
Total goods available for sale 645,000
Less finished goods, 6/1/05 240,000
Cost of goods sold (P546,750/1.35) 405,000

Note: Work back from cost of goods sold.

PROBLEM NO. 2 - Quezon Corporation
Per books Adjustments Per audit
Inc.(Dec.)
Sales 5,530,000 1 (130,000) 5,250,000 1 A
5 (150,000)
Purchases 3,000,000 2 18,000 3,018,000 2 B
Inventory 600,000 3 64,000 864,000 3 A
4 80,000
6 120,000
Accounts receivable 500,000 1 (130,000) 220,000 4 C
5 (150,000)
Accounts payable 400,000 2 18,000 418,000 5 A

Note : Prepare "T" accounts then post identified adjustments.

Adjusting entries

1 Sales (P46,000+P68,000+P16,000) 130,000

Accounts receivable 130,000
To adjust unshipped goods recorded as sales (SI No. 969, 970 and 971)

2 Cost of sales (Purchases) 18,000

Accounts payable 18,000
To take up unrecorded purchases (RR No. 1060)

3 Inventory 64,000
Cost of sales 64,000
To take up goods under RR No. 1063

4 Inventory (P100,000/1.25) 80,000

Cost of sales 80,000
To take up unshipped goods under SI No. 968

5 Sales 150,000
Accounts receivable 150,000
To reverse enrty made to record SI No. 966

6 Inventory (P150,000/1.25) 120,000

Cost of sales 120,000
To take up goods under SI No. 966
PROBLEM NO. 9 - Pranaque Company

Question No. 1 - C
Question No. 2 - A
Question No. 3 - B

Units in
Ending Est.
Inventory Selling Est. Cost to Inventory
Item (FIFO) Cost Total cost Price Sell NRV LCM Total NRV value Allow
Product C 30,000 8.00 240,000 7.20 0.72 6.48 6.48 194,400 194,400 45,600
15,000 6.50 97,500 7.20 0.72 6.48 6.48 97,200 97,200 300
337,500 291,600 291,600 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 1.25 37,500 1.80 0.18 1.62 1.25 48,600 37,500 -
20,000 0.90 18,000 1.80 0.18 1.62 0.90 32,400 18,000 -
55,500 81,000 55,500 -

655,500 595,350 569,850 85,650

(1) (2) (3)
Question No. 4 - D

Units in
Sold
Item (FIFO) Cost Total cost

Product C 50,000 6.00 300,000

55,000 6.50 357,500
105,000 657,500

Product P 30,000 10.00 300,000

20,000 10.50 210,000
50,000 510,000

Product A 45,000 0.90 40,500

Total cost of sales 1,208,000

Alternative computation:
Inventory, 10/1/05
Product C (50,000 units x P6) 300,000
Product P (30,000 units x P10) 300,000
Product A (65,000 units x P0.90) 58,500 658,500
Add purchases:
Product C [(70,000 units x P6.50)+(30,000 units x P8) 695,000
Product P (45,000 units x P10.50) 472,500
Product A (30,000 units x P1.25) 37,500 1,205,000
Total goods available for sale 1,863,500
Less inventory, 10/31/05 (see no. 1) 655,500
Cost of sales 1,208,000