Professional Documents
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CPA REVIEW
1. Under the FIFO, what amount should be reported respectively as cost of ending inventory
and cost of goods sold?
a. 1,780,000 and 2,220,000
b. 1,790,000 and 2,210,000
c. 1,425,000 and 2,575,000
d. 1,900,000 and 2,100,000
2. Under the perpetual average method or moving average, what amount should be reported
respectively as cost of ending inventory and cost of goods sold?
a. 1,690,000 and 2,310,000
b. 1,790,000 and 2,210,000
c. 1,700,500 and 2,299,500
d. 1,616,995 and 2,383,005
3. Under the periodic average method or weighted average, what amount should be reported
respectively as cost of ending inventory and cost of goods sold?
a. 1,616,995 and 2,383,005
b. 1,790,000 and 2,210,000
c. 1,678,365 and 2,321,635
d. 1,700,000 and 2,300,000
2. During the current year, L COMPANY purchased a tract of land for P12,000,000. The entity
incurred additional cost of P3,000,000 in preparing the land for sale. The tract of land was
subdivided into residential lots as 100 Class A lots with sale price of P240,000 per lot, 100 Class
B lots with the sale price of P160,000 per lot, and 200 Class C lots with sale price of P100,000
per lot. What amount of the costs should be allocated to Class A lots?
a. 3,000,000
b. 3,750,000
c. 6,000,000
d. 7,200,000
Inventory – January 1:
Cost 3,000,000
Net realizable value 2,800,000
Net purchases 8,000,000
Inventory – December 31:
Cost 4,000,000
Net realizable value 3,700,000
1
What amount should be reported as cost of goods sold under LCNRV?
a. 7,000,000
b. 7,100,000
c. 7,300,000
d. 7,200,000
Product 1 Product 2
Materials and Conversion cost 3,000,000 3,600,000
Selling price 4,000,000 6,000,000
Estimated selling cost 1,200,000 1,400,000
General administration cost 600,000 1,600,000
Normal profit margin on sales 1,000,000 1,500,000
At year end, the manufacturer of the products has been completed but no selling cost has yet
been incurred. What total amount should be reported as inventory at year-end?
a. 6,400,000
b. 6,600,000
c. 4,900,000
d. 5,800,000
6. On the night of December 31, 2017, a fire destroyed most of the merchandise inventory of P
COMPANY. All goods were completely destroyed except for partially damaged goods that
normally sell for P100,000 and that had an estimated net realizable value of P25,000 and
undamaged goods that normally sell for P60,000.
8. The closing inventory of R COMPANY amounted to P116,400 excluding the following two
inventory lines:
400 items, which had cost P40 each. All were sold after the balance sheet date for P30
each, with selling expenses of P2,000 for the batch
200 different items, which had cost P30 each. These items were found to be defective at
the balance sheet date. Rectification work after the balance sheet date amounted to
P1,200, after which they were sold for P35, with selling expenses totaling P300.
What figure should appear in R’s statement of financial position for inventory?
a. 116,400
b. 126,400
c. 131,900
d. 132,400
9. On September 30, 2017, a fire at S COMPANY’s only warehouse caused severe damage to its
entire inventory. Based on recent history, S has a gross profit of 30% of net sales. The
following information is available from S’s records for the nine months ended September 30,
2017:
Inventory at January 1, 2017 550,000
Total purchases received and recorded from January to date of fire 3,000,000
Total freight cost of goods purchased and received 60,000
Total credit memo received on goods purchased and received 200,000
Total discounts taken on purchases 80,000
Invoice received for goods purchased but still in transit shipped on
September 30, 2017, FOB shipping point 120,000
Total sales delivered and recorded from January to date of fire 3,600,000
Unrecorded sales invoice for goods delivered 300,000
Total sales returns accounted and recorded to date of fire 160,000
Total sales discounts taken by customers on recorded sales 40,000
A physical inventory disclosed usable damaged goods which S estimates can be sold to a jobber
for P50,000.
Using the gross profit method, what amount of impairment loss on its inventory should S report
in its December 31, 2017 profit or loss?
a. 602,000
b. 662,000
c. 782,000
d. 832,000