1.

) Aman Company provided the following data:

Items counted in the bodega 4,000,000

Items included in the count specifically segregated per sale contract 100,000
Items in receiving department, returned by customer, in good condition 50,000
Items ordered and in the receiving department 400,000
Items ordered, invoice received but goods not received. Freight is on account 300,000
of the seller.
Items shipped today, invoice mailed, FOB shipping point 250,000
Items shipped today, invoice mailed, FOB destination 150,000
Items currently being used for window display 200,000
Items on counter for sale 800,000
Items in receiving department, refused because of damage 180,000
Items included in count, damaged and unsalable 50,000
Items in the shipping department 250,000

What is the correct amount of inventory?

a. 5,700,000
b. 6,000,000
c. 5,800,000
d. 5,150,000

2.) Lunar Company included the following items under inventory:

Materials 1,400,000
Advance for materials ordered 200,000
Goods in process 650,000
Unexpired insurance on inventory 60,000
Advertising catalogs and shipping cartons 150,000
Finished goods in factory 2,000,000
Finished goods in entity-owned retail store, including 50% profit on cost 750,000
Finished goods in hands of consignees including 40% profit on sales 400,000
Finished goods in transit to customers, shipped FOB destination at cost 250,000
Finished goods out on approval, at cost 100,000
Unsalable finished goods, at cost 50,000
Office supplies 40,000
Materials in transit, shipped FOB shipping point, excluding freight of P30,000 330,000
Goods held on consignment, at sales price, cost P150,000 200,000
What is the correct amount of inventory?
a. 5,375,0000 c. 5,540,000
b. 5,500,000 d. 5,250,000

3.) Corolla Company incurred the following costs:

Materials 700,000
Storage costs of finished goods 180,000
Delivery to customers 40,000
Irrecoverable purchase taxes 60,000

At what amount should the inventory be measured?

a. 880,000 c. 980,000
b. 760,000 d. 940,000

4.) On December 26,2013, Branigan Company purchased goods costing P1,000,000. The terms were FOB
Shipping point. The goods were received on December 28,2013. Costs incurred by the entity in
connection with the purchase and delivery of the goods were normal freight charge P30,000, handling
cost P 20,000, insurance on shipment P5,000 and abnormal freight charge for express shipping P12,000.
What is the total cost of the inventory?
a. 1,050,000 c. 1,055,000
b. 1,030,000 d. 1,067,000

5.) Brooke Company used a perpetual inventory system. At the end of 2012, the inventory account was
P360,000 and P30,000 of those goods included in ending inventory were purchased FOB shipping and
did not arrive until 2013. Purchases in 2013 were P3,000,000. The perpetual inventory records showed
an ending inventory of P 420,000 for 2013. A physical count at the end of 2013 showed an inventory of
P380,000. Inventory shortages are included in cost of goods sold. What amount should be reported as
cost of goods sold for 2013?
a. 2,940,000 c. 3,000,000
b. 2,980,000 d. 3,010,000

6.) On October 1, 2013, Grimm Company consigned 40 freezers to Holden Company costing P14,000
each for sale at P20,000 each and paid P16,000 in transportation costs. On December 30, 2013, Holden
Company reported the sale of 10 freezers and remitted P170,000. The remittance was net of the agreed
15% commission. What amount should be recorded as consignment sales revenue for 2013?
a. 154,000 c. 196,000
b. 170,000 d. 200,000

7.) On December 1, 2013, Alt Department Store received 505 sweaters on consignment from Todd.
Todd’s cost for the sweaters was P800 each, and they were priced to sell at P1,000. Alt’s commission on
consigned goods is 10%. On December 31, 2013, 5 sweaters remained. In the December 31, 2013
statement of financial position. What amount should be reported as payable for consigned goods?
a. 490,000 c. 450,000
b. 454,000 d. 404,000
8.) Clem Company provided the following for the current year:
Central Warehouse Held by consignees
Beginning Inventory 1,100,000 120,000
Purchases 4,800,000 600,000
Freight In 100,000
Transportation to consignees 50,000
Freight out 300,000 80,000
Ending inventory 1,450,000 200,000
What is the cost of sales for the current year?
a. 4,550,000 c. 5,070,000
b. 4,850,000 d. 5,120,000

9.) On June 1, 2013, Pitt Company sold merchandise with a list price of P5,000,000 to Burr on account.
Pitt allowed trade discounts of 30% and 20%. Credit terms were 2/10, n/30 and the sale was made FOB
shipping point. Pitt prepaid 200,000 of delivery costs for Burr as an accommodation. On June 11, 2013,
what amount was received by Pitt from Burr as remittance in full?
a. 2,744,000 c. 2,944,000
b. 2,940,000 d. 3,140,000

10.) On August 1 of the current year, Stella Company recorded purchases of inventory of P800,000 and
P1,000,000 under credit terms of 2/15, net 30. The payment due on the P800,000 purchased was
remitted on August 16. The payment due on the P1,000,000 purchased was remitted on August 31.
Under the net method and the gross method, this purchases should be included at what respective
amounts in the determination of cost of goods available for sale?

Net Method Gross Method

a. 1,784,000 1,764,000
b. 1,764,000 1,800,000
c. 1,764,000 1,784,000
d. 1,800,000 1,764,000

11.) Wine Company recorded purchases at net amount. On December 10, the entity purchased
merchandise on account, P4,000,000, terms 2/10, n/30. The entity returned P300,000 of the December
10 purchase and receive credit on account. The account had not been paid on December 31. At what
amount should the account payable adjusted on December 31?
a. 74,000 c. 80,000
b. 86,000 d. 0

12.) Cognac Company used the perpetual inventory and gross method of recording purchases. On
December 1, the entity purchased 1,500,000 of inventory, terms 2/10, n/30. On December 5, the entity
returned goods that cost P150,000. On December 11, the entity paid the supplier. On December 11,
what account should be credited?
a. Purchase Discount for 30,000 c. Purchased Discount for 27,000
b. Inventory for 30,000 d. Inventory for 27,000

13.) Hero Company’s inventory on December 31, 2013 was P6,000,000 based on a physical count of
goods priced at cost and before any necessary year-end adjustments relating to the following:
- Included in the physical were goods build to a customer FOB shipping point on December 30,2013.
These goods had a cost of P125,000 and were picked up by the carrier on January 7, 2014.

- Goods shipped FOB shipping point on December 28,2013, from a vendor to Hero were received on
January 4,2013. The invoice cost was P300,000.

What amount should be reported as inventory on December 31,2013?

a. 5,875,000 c. 6,175,000
b. 6,000,000 d. 6,300,000

14.) The physical count conducted in the warehouse of Reverend Company on December 31, 2013
revealed merchandise with a total cost of P5,000,000. However, further investigation revealed that the
following items were excluded from the count.
- Goods sold to a customer, which are being held for the customer to call at the customer’s convenience
with a cost of P200,000.
- A packing case containing a product costing P500,000 was standing in the shipping room when the
physical inventory was taken. It was not included in the inventory because it was marked “hold for
shipping instructions.” The investigation revealed that the customer’s order was dated December 28,
2013, but the case was shipped and the customer billed on January 4, 2014.
- A special machine costing P250,000, fabricated to order for a customer, was finished and specifically
segregated at the back part of the shipping room on December 31,2013. The customer was billed on
that date and the machine was excluded from inventory although it was shipped on January 2,2014.
What is the correct amount of inventory that should be reported on December 31, 2013?
a. 5,950,000 c. 5,500,000
b. 5,750,000 d. 5,700,000

15.) The inventory on hand on December 31,2013 for Fair Company is valued at a cost of P950,000. The
following items were not included in this inventory amount:
Item 1: Purchased goods in transit, shipped FOB destination, invoice price of P30,000 which includes
freight charge of P1,500.
Item 2: Goods held on consignment by Fair Company at a sales price of P28,000, including sales
commission of 20% of the sales price.
Item 3: Goods sold to Grace Company, under terms FOB destination, invoiced for P18,500 which
includes P1,000 freight charge to deliver the goods. Goods are in transit. The entity’s selling price is
140% of cost.
Item 4: Purchased goods in transit, terms FOB shipping point, invoice price P50,000, freight cost, P2,500.
Item 5: Goods out on consignment to Manila Company, sales price P35,000, shipping cost of P2,000.
What is the adjusted cost of the inventory on December 31, 2013?
a. 1,042,000 c. 1,040,000
b. 1,043,000 d. 1,073,500

16.) Baritone Company counted and reported the ending inventory on December 31, 2013 at
P2,000,000. None of the following items were included when the total amount of the ending inventory
was computed:
- P150,000 in goods located in the entity’s warehouse that are on consignment from another entity.
- P200,000 in goods that were sold by the entity and shipped on December 30 and were in transit on
December 31,2013. The goods were received by the customer on January 2,2014. Terms were FOB
destination.
- P300,000 in goods that were purchased by the entity and shipped on December 30 and were in transit
on December 31,2013. The goods were received by the entity on January 2,2014. Terms were FOB
shipping point.
-P400,000 in goods that were sold by the entity and shipped on December 30 and were in transit on
December 31,2013. The goods were received by the customer on January 2,2014. Terms were FOB
shipping point.
What is the correct amount of inventory on December 31,2013?
a. 2,500,000 c. 2,900,000
b. 2,350,000 d. 2,750,000

For items 17 to 21:

A flood recently destroyed many of the financial records of Baclaran Manufacturing Company.
Management has hired you to re-create as much financial information as possible for the month of July.
You are able to find out that the company uses an average cost of inventory valuation system. You also
learn that Pasay makes a physical count at the end of each month in order to determine monthly ending
inventory values. By examining various documents, you are able to gather the following information:

Ending inventory at July 31 25,000 units

Total cost of unit available for sale in July P 600,000
Cost of goods sold during July P 475,000
Cost of beginning inventory, July 1 P3 per unit
Gross profit on sales for July 20% based on sales

Questions:
Based on the above and the result of your engagement, you are asked to provide the following
information:
17. Sales
a. 593,750 c. 600,000
b. 570,000 d. 684,000

18. Number of units on hand, July 1

a. 20,000 c. 25,000
b. 60,000 d. 95,000

19. Units sold during July

a. 25,000 c. 20,000
b. 95,000 d. 60,000

20. Unit cost of inventory

a. P5 c. P7
b. P6 d. P4

21. Value of inventory at July 31

a. P 25,000 c. P 120,000
b. P 125,000 d. P 100,000

For items 22 to 28
On December 31, 2016, a fire damaged the finished goods of Francis Corporation. Financial records
before the fire follow:

Jan 1 Dec 31
Accounts payable 555,000 250,000
Direct Materials 200,000 320,000
Work in Process 250,000 280,000
Finished Goods 400,000 ?
Sales 5,100,000
Sales discounts 100,000
Purchases 3,000,000
Freight-in (on account) 100,000
Purchase return and allowance 70,000
Purchase discounts 80,000
Gross Profit 20%

Additional information:
Cost of goods on consignment is P20,000, and finished goods damaged by the fire can be sold at a
salvage value of P10,000. Direct labor, P900,000; Factory overhead, P675,000.
22. Payments of merchandise including freight-in
a. P3,255,000 c. P3,185,000
b. P3,155,000 d. P3,175,000

23. Direct materials used

a. P2,830,000 c. 2,880,000
b. P2,630,000 d. 2,870,000

24. Cost of goods manufactured

a. 4,375,000 c. 4,425,000
b. 4,575,000 d. 4,415,000

25. Assuming that the gross profit rate is based on cost, determine the cost of goods sold
a. 4,080,000 c. 5,100,000
b. 4,250,000 d. 5,020,000

26. Assuming that the gross profit rate is based on cost, determine the inventory fire loss
a. 665,000 c. 695,000
b. 495,000 d. 525,000

27. Assuming the gross profit rate is based on sales, determine the cost of goods sold
a. 4,080,000 c. 5,100,000
b. 4,250,000 d. 5,020,000

28. Assuming that the gross profit rate is based on sales, determine the inventory fire loss
a. 665,000 c. 695,000
b. 495,000 d. 525,000

For items
Presented before is information taken from Tortillo Company for the three months ended March
31,2016
Cost Retail
Inventory, Jan 1 300,000 1,200,000
Purchases 6,000,000 8,500,000
Purchase returns 400,000 800,000
Purchase discounts 150,000 -
Purchase allowance 50,000 -
Freight-in 20,000 -
Markups 600,000
Markup cancellations 50,000
Departmental transfer-in 600,000 1,100,000
Departmental transfer-out 560,000 1,334,000
Abnormal loss
Markdown 316,000
Markdown cancellations 100,000
Sales 7,000,000
Sales returns 700,000
Sales allowance and discounts -
Normal shrinkage 500,000

Questions:
Based on the above date, answer the following:
29. What should be reported as the estimated cost of ending inventory using conservative method?
a. 1,375,000 c. 1,400,000
b. 1,540,000 d. 2,200,000

30. What should be reported as cost of goods sold using conservative method?
a. 6,800,000 c. 4,220,000
b. 4,385,000 d. 4,352,000

31. What should be reported as the estimated cost of ending inventory using FIFO method?
a. 1,375,000 c. 1,408,000
b. 1,540,000 d. 2,200,000

32. What should be reported as cost of goods sold using FIFO method?
a. 6,800,000 c. 4,220,000
b. 4,385,000 d. 4,352,000

33. What should be reported as the estimated cost of ending inventory using average method?
a. 1,375,000 c. 1,408,000
b. 1,540,000 d. 2,220,000

34. What should be reported as cost of goods sold using average method?
a. 6,800,000 c. 4,220,000
b. 4,385,000 d. 4,352,000