Given Problem on Inventory

You have observed the physical count of RONALD CORPORATION’s inventory

taken on December 31, 2019. The following errors were discovered:

a. Goods that cost P60,000 was sold for P9,500 on December 29, 2019. The
order was shipped December 31, 2019 with terms fob destination. The
merchandise was not included in the ending inventory. The sale was not
recorded until January 4, 2020, the date when the customer made
payment of the sold goods.

b. On December 29, 2019, RONALD CORPORATION purchased merchandise

costing P115,000 from a supplier. The order was shipped December 30,
2019 (terms FOB shipping point) and was still “in transit” on December
31, 2019. Since the invoice was received on December 31, the purchase
was recorded in 2019. The merchandise was included in the inventory
count.

c. On January 4, 2020, goods that were included in the ending inventory at

December 31, 2019, were returned to RONALD CORPORATION because
the consignee had not been able to sell it. The cost of this merchandise
was P19,500 with a selling price of P104,500.

d. RONALD CORPORATION failed to make an entry for a purchase on

account of P6,500 at the end of 2019, although it included this
merchandise in the inventory count. The purchase was recorded when
payment was made to the supplier in 2019.

e. On January 6, 2007, RONALD CORPORATION received merchandise which

had been shipped to them on December 31, 2019. The terms of the
purchase were fob destination. Cost of the merchandise was P65,400.
The purchase was not recorded until payment was made in January 2020
but the goods were included in the inventory as of December 31, 2019.

f. Goods with a selling price of P300,000 was shipped to ROLAND

Company, a consignee, on December 29, 2019. Since this was shipped
before the inventory count, the merchandise, which was billed 10% above
cost, was excluded from the inventory count. Sales was not recorded
until the inventory was received on January 5, 2020. Your further
investigation revealed that 55% of these goods were sold in 2019 and the
on-hand at December 31, 2019 were not yet reported in 2019 inventory.