INVENTORY PROBLEMS FOR RECITATION

1. Three identical units of Item Steele Plate are purchased during March, as shown below.
Item Steele Plate Units Cost
Mar. 3 Purchase 1 P800
Mar. 10 Purchase 1 840
Mar. 19 Purchase 1 880
Total 3 P2,520

Assume that one unit is sold on March 23 for P1,025. Determine the gross profit for March and
ending inventory on March 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

2. Three identical units of Item Magnesium XP are purchased during May, as shown below.
Item Magnesium Units Cost
XP
May 3 Purchase 1 P130
May 10 Purchase 1 136
May 19 Purchase 1 142
Total 3 P408

Assume that one unit is sold on May 23 for P153. Determine the gross profit for May and ending
inventory on May 31 using (a) FIFO, (b) LIFO, and (c) average cost methods.

3. Assume that three identical units of merchandise are purchased during October, as
follows:
Units Cost
October 5 Purchase 1 P5
12 Purchase 1 7
28 Purchase 1 9
Total 3 P21

Assume one unit is sold on October 31 for P15. Determine Cost of Merchandise Sold, Gross
Profit, and Ending Inventory under the LIFO method.

4. Assume that three identical units of merchandise are purchased during October, as
follows:
Units Cost
October 5 Purchase 1 P5
12 Purchase 1 7
28 Purchase 1 9
Total 3 P21

Assume one unit is sold on October 31 for P15. Determine Cost of Merchandise Sold, Gross
Profit, and Ending Inventory under the Average Cost method.
5. Beginning inventory, purchases and sales data for widgets are as follows:

Apr 3 Inventory 15 units @ P30

11 Purchase 12 units @ P27
14 Sale 18 units
21 Purchase 7 units @ P25
25 Sale 10 units

Complete the inventory cost card assuming the business maintains a perpetual inventory
system and calculates the cost of merchandise sold and ending inventory using FIFO.

Cost of
Purchases Merchandise Sold Inventory
Date Qty Unit Total Qty Unit Total Qty Unit Total
Cost Cost Cost Cost Cost Cost

Balances

6. The units of an item available for sale during the year were as follows:

January 10 Inventory 27 units @ P90

February 27 Purchase 54 units @ P98
July 11 Purchase 63 units @ P106
November 13 Purchase 36 units @ P115

There are 50 units of the item in the physical inventory at December 31. The periodic inventory
system is used. Determine the ending inventory cost by (a) the first-in, first-out method, (b) the
last-in, first-out method, and (c) the average cost method. Show your work.

7. During the taking of its physical inventory on December 31, 2011, Gentry Supplies
Company incorrectly counted its inventory as P245,000 instead of the correct amount of
P254,000. Indicate the affect of the misstatement on Gentry Supplies Company’s balance
sheet and income statement for the year ended December 31, 2011.

Amount of
 Misstatement
Overstatement
(Understatement)
Balance Sheet:
Merchandise inventory
Current assets
Total assets
Owner’s equity

Income Statement:
Cost of merchandise sold
Gross profit
Net Income

8. On the basis of the following data, determine the value of the inventory at the lower of
cost or NRV and compute the amount of loss. Apply to each inventory item. Show your work.

Item Inventory Unit Cost Unit Selling Unit Cost to Unit Cost to
Quantity Price Price Sell Complete
Product C 420 P6 P8 P3 0
Product D 370 12 14 P2 P2

9. On the basis of the following data, determine the value of the inventory at the lower of
cost or NRV and the loss on valuation, if any. Apply lower of cost or NRV to each inventory item.
Show your work.

Item Inventory Unit Cost Unit Selling Unit Cost to Unit Cost to
Quantity Price Price Sell Complete
Gear X 100 P33 P35 P2 P2
Gear Y 75 27 30 1 1