Items Inventoriable?

Amount Selected Explanation

1 yes 150,000 Gross price

2 yes 550,000 The amount to be recorded is based on the

normal credit term price. Over the credit term, the
difference between the price under normal credit
and the price under extended credit is recorded as
interest expense
3 yes 180,000 Invoice price means the quantity discount or trade
discount was already deducted.

4 yes 550,000 Example of recoverable purchase tax.

5 yes 515,000

6 yes 5,000
7 yes 25,000
8 yes 420,000

9 yes 57,000

10 no - Not inventoriable

11 yes 10,000
12 no -

13 no -
14 no - Freight out

15 no - Related to sale

16 no - Sale to non vat registered buyer

17 no - Selling expense

18 no - Selling or admin expense

19 no - Admin expense
20 no - Admin expense

21 yes 122,000 Part of inventory

22 yes 56,000 Storage cost, part of inventory

23 no - Selling expense

24 yes 10,000 Related to cost of designing products

25 no - Storage cost for finished goods is not necessary.

26 no - Admin expense

27 yes 17,8000 Part of inventory

28 no - Expensed outright

29 no - Not capitalized as inventory but recognized as

foreign exchange loss.

Items

1 Supplier's gross price for raw materials, P150,000

2 Materials purchased from another supplier on extended credit amounting

to P570,000. The price to be paid under normal credit terms is P550,000.

3 Invoice Price of raw materials purchased amounting to P180,000. Quantity

discounts of 10, 5 are allowed by supplier
4 Materials purchased from supplier amounting to P616,000, inclusive of
12% VAT. The company is VAT registered and can claim this as an input
VAT

5 Materials purchased from a supplier amounting to P515,000, inclusive of

nonrecoverable purchase tax of P15,000

6 Cost of transporting raw materials to the business premises, P5,000

7 Import duties paid to authorities on import of raw materials to be used

during the manufacturing process, P25,000

8 Labor costs directly incurred in the processing of raw materials P420,000

9 Normal amount of wasted labor, P57,000

10 Abnormal amount of wasted labor, P69,000
11 Variable costs (electricity) incurred in the processing of raw materials,
P10,000
12 Fixed production overheads amounting to P500,000. The normal capacity
is 100,000 machine hours but the company only used 80,000 machine
hours

13 Fixed Production overheads amounting to P500,000. The normal capacity

is 100,000 machine hours but the company used 120,000 machine hours.

14 Costs of transporting goods to customers on sales, P2,500

15 Non-recoverable purchase taxes charged to customers on sales, P12,000

16 Non-recoverable sales taxes, P14,440

17 Commission payable to salesmen on the sale of goods, P14,500

18 Provisions for bad and doubtful debts in relation to trade receivables,

P56,000
19 Costs of the accounts department, P140,000

20 Head office costs relating to the overall management of the business

P234,000
21 Borrowing cost incurred on inventories that takes substantial amount as of
time to create, P122,000

22 Storage cost for a maturing products, P56,000

23 Selling costs, P45,600

24 Non-production overheads cost of designing products fro specific
customers. P10,000

25 Storage cost of finished goods, P23,000

26 Fixed administration costs or overheads (rent for office), P450,000

27 Insurance on in transit inventories, P17,800

28 Freight incurred when the inventories were returned and redelivered,
P34,100
29 Foreign exchange differences arising directly on the recent acquisition of
inventories invoiced in a foreign currency. The peso equivalent when
acquired is P567,000 and the peso equivalent of the merchandise when
paid is P577,000