PROBLEM 1 – 1 pt

Company A provided the ff information at current year-end:

Finished goods in storeroom at cost including overhead

of P400,000 P 2,000,000
Finished goods in transit, including freight charge of
P20,000, FOB shipping point 250,000
Goods in process, at cost of materials and direct labor 720,000
Materials 1,000,000
Material in transit, FOB shipping point 50,000
Defective materials returned to suppliers for replacement 100,000
Shipping supplies 20,000
Gasoline and oil for testing finished goods 110,000
Machine lubricants 60,000

Determine cost of inventory at year-end.

PROBLEM 2 – 10 pts

Company A began operations in the current year. The entity used perpetual inventory system.

During the year, the company purchased merchandise having a gross invoice cost of
P1,500,000. All purchases were made under the terms 5/10, n/30, FOB destination. Relative to
this, the company paid freight expenses of P100,000.

The company was able to pay 80% of the purchases within the discount period but the
remaining purchases were paid beyond 10 days.

70% of the purchases were sold for P1,200,000.

Prepare journal entries to record the transactions using gross method and net method.

PROBLEM 3 – 3 pts

Company A reported that a flood recently destroyed many of their financial records. The entity
used average cost inventory valuation.

The entity made a physical count at the end of each month in order to determine monthly ending
inventory value.

By examining various documents, the following data are gathered:

Ending inventory at July 31 60,000 units

Total cost of units available for sale in July 1,452,100
Cost of goods sold during July 1,164,100
Cost of beginning inventory, July 1 4.00 per unit
Gross profit on sales for July 935,900
 Units Unit Cost Total Cost
July 5 55,000 5.1 280,500
July 11 53,000 5 265,000
July 15 45,000 5.5 247,500
July 16 47,000 5.3 249,100
Total purchases 200,000 1,042,100

Determine:
(1) Cost of ending inventory on July 31
(2) Cost of goods sold under FIFO valuation method
(3) Cost of ending inventory on July 31 under FIFO valuation method

PROBLEM 4 – 6 pts

The following information were obtained from Company A’s accounting records:

Sales for the 11 months ended November 30 P 3,400,000

Sales for the year ended December 31 3,840,000
Purchases for 11 months ended November 30 2,700,000
Purchases for year ended December 31 3,200,000
Inventory, January 1 350,000
Inventory, November 30 (per physical count) 380,000

Additionally, the following were noted:

 Shipments received in unsalable condition and excluded
from physical inventory:
Total at November 30 4,000
Total at December 31 (incl. Nov. 30
Unrecorded returns) 6,000
The returns were not recorded because no credit memos
were received from vendors.
 Deposit made with vendor and charged to
Purchases in October. The goods were shipped
in January of the current year. 8,000
 Deposit made with vendor and charged to
Purchases in November. The goods were
shipped FOB destination on November 29 and
were included in the physical inventory as
goods in transit. 22,000
 Shipments received in November and included
in the physical count at November 30 but
recorded as December purchases. 30,000
 Due to the carelessness of the receiving
department, a December shipment was
damaged by rain. These goods were later
sold at cost in December. 40,000

Based on the preceding information, determine:

(1) Net purchases for the year ended December 31
 (2) Cost of goods sold for the year ended December 31
(3) Estimated ending inventory as of December 31

PROBLEM 5 – 3 pts

Company A provided the following data:

Beginning inventory
Cost P 500,000
Selling price 770,000
Purchases:
Cost 3,070,000
Selling price 4,300,000
Transportation in 70,000
Purchase discount 45,000
Purchase return:
Cost 25,000
Selling price 40,000
Sales return 80,000
Sales discount 20,000
Markup 100,000
Markdown 350,000
Cancelation of markup 30,000
Cancelation of markdown 10,000
Sales 4,000,000

Determine estimated cost of ending inventory under:

(1) LCNRV approach
(2) Average cost approach
(3) FIFO approach

PROBLEM 6 – 1 pt

Company A is engaged in raising dairy livestock. The entity provided the following information
during the current year:

Carrying amount on January 1 P 5,000,000

Increase due to purchases 2,000,000
Gain arising from change in fair value less cost of
disposal attributable to price change 400,000
Gain arising from change in fair value less cost of
disposal attributable to physical change 600,000
Decrease due to sales 850,000
Decrease due to harvest 300,000

Determine the carrying amount of the biological asset on December 31.

PROBLEM 7 – 3 pts

Company A had a herd of 10 2 y/o animals at the beginning of the current year. One animal
aged 2.5 years was purchased on July 1 for P108 and one animal was born on July 1. No
animals were sold or disposed of during the year.

Fair value less cost of disposal per unit:

Jan 1 Jul 1 Dec 31

New born animal 70 72
6-month old animal 80
2 y/o animal 100 105
2.5 y/o animal 108 111
3 y/o animal 120

Determine:
(1) Fair value of the biological assets on December 31
(2) Gain from change in fair value of biological assets that should be recognized in the
current year
(3) Gain from change in fair value due to price change