23. INVENTORY Basic problems Troblem 23-1 (IAA) Brandy Com took a physical inventory at the end of th id Beermined that b 3,600,000 of goods were on hand. In addition, the entity determined that P200,000 of goods purchased in transit shipped FOB shipping point were actually received two days after the physical count and that the entity had P300,000 of goods out on consignment. ‘What amount should be reported as inventory at year-end? . a. 2,600,000 b. 2,800,000 c. 2,900,000 d. 3,100,000Problem 23-2 (IAA) , : Scotch Company took a i inventory at the end of the year and determined that P1,900,000 of; oe were on hand. In addition, the entity determined that P240,000 of goods purchased were in transit shipped FOB destination. The goods were actually received three days after the inventory count. The entity sold P100,000 worth of inventory FOB destination. Such inventory is in transit at year-end. What amount should be reported as inventory at year-end? b. 25140,000 c. 2000,000 d. 27240,000 -Problem 23-3 (LAA) 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, retumed 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 of seller. 300,000 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 Whatis the correct amount of inventory? 5,700,000 6,000,000 5,800,000 5,150,000 aeseproblem 23-4 (IAA) Lunar Company included the following items under inventory: ‘ials ; 1,400,000 ie for materials ordered fl 200,000 Goods in process : 650,000 Unexpire: 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 f oe 250,000 Finished goods out on approval, at cost 100,000: Unsalable finished goods, at cost ‘50,000 Office supplies : oe 40,000 Materials in transit, shipped FOB shipping point, . ° excluding freight of P30,000 moan 330,000 Sonn td ob consignment, at sales price, cost P150,000 200,000 Whatis the correct amount of inventory? , a. 5,375,000 Hee eee b. 5,500,000 c. 5,540,000 d. 5,250,000Problem 23-5 (LAA) Ram Company provided the following information at the end of current year. , Finished goods in storeroom, at cost, including overhead of P400,000 or 20%. 2,000,000 Finished goods in transit, including freight charge of P20,900, FOB shipping point . 250,000 Finished goods held by salesmen, at selling price, cost, P100,000 . 140,000 Goods in process, at cost of materials and direct labor 720,000 Materials : 1,000,000 Materials in transit, FOB destination * = 50,000 Defective materials returned to suppliers : . 100,000 Shipping supplies . 20,000 Gasoline and oil for testing finished goods . 110,000 ~ Machine lubricants , 60,000 What is the correct amount of inventory? 4,000,000: 4,170,000 4,270,000 4,090,000 pe oPProblem 23-6 (IFRS) Brilliant Company has incurred the following cos ea NB Costs during the current Cost of purchases based on vendors’ invoices Trade discounts on purchases already deducted 5,000,000 from vendors’ invoices Import duties 500,000 Freight and insurance on purchases : mone Other handling costs relating to imports Salaries of accounting department 100,000 Brokerage commission paid to agents for arranging imports eon Sales commission paid to sales agents 300.000 After-sales warranty costs : ~ 380,000 What is the total cost of purchases? a. 5,700,000” : b. 6,100,000 ¢. 6,700,000 4. 6,500,000 .Problem 23-8 (IFRS) Eagle Company incurred the following costs in relation to a certain product: . Direct materials and labor . 180,000 _ Variable production overhead . 25,000 Factory administrative costs : 15,000 Fixed production costs . * 20,000 What is the correct measurement of the product? a. 205,000 b. 225,000 c. 195,000" d. 240,000problem 23-9 (AICPA Adapted) Fenn Company provided the following information for the Merchandise purchased for resale ' nt year: Freight in 4,000,000 Freight out 100,000 Purchase returns 50,000 Interest on inventory loan uo aoe What is the inventoriable cost of the purchase? ° , a. 4,280,000 b. 4,030,000 . c. 4,080,000 d 4,130,000problem 23-10(AICPA Adapted) _” On December 28, 2014; Kerr Company purchased goods costing 500,000. The terms were FOB destination. The costs incurred in connection with the sale and delivery of the goods were: 10,000 Packaging for shipment a Shipping 15,000 Special handling charges a 25,000 These goods were received on December 31, 2014. On December 31, 2014, what total cost should be included in inventory? a. 545,000 b. 535,000 c. 520,000 a 500,000 f Solution 23-10 Answer d When the shipping terms are FOB destination, the seller is ponsible for costs incurred in transporting the goods to the buyer. 287Problem 23-11 (AICPA Adapted) On December 26, 2014, Branigan Company purchased goods costing P1,000,000. The terms were FOB shipping point. The goods were received on December 28, 2014. Costs incurred by the entity in connection with the purchase and delivery of the goods were normal freight charge P30,000, handling cost P20,000, insurance on shipment P5,000 and abnormal freight charge for express shipping P 12,000. What is the total cost of the inventory? a. 1,050,000 b. 1,030,000 c. 1,055,000 d. 1,067,000Problem 23-12 (AICPA Adapted) , Brooke Company used a perpetual inventory system. At the end of 2013, the inventory account was P360,000 and P30,000 of those goods included in ending inventory were purchased FOB shipping point and did not arrive until 2014. Purchases in 2014 were P3,000,000. The perpetual inventory records showed an ending inventory of P420,000 for 2014. A physical count at the end of 2014 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 2014? a. 2,940,000 b. 2,980,000 c. 3,000,000 d. 3,010,000Problew: 23-13 (A ICPA\ Adapted) Stone Company had the following transactions during December 2014: Inventory shipped on consignment to Beta Company 1,800,000 Freight paid by Stone , 20,000 Inventory received on consignment from AlphaCompany 1 200.000 Freight paid by Alpha : 50,000 No sales of consigned goods were made in December 2014. What amount should be included in inventory on December 31, 2014? a. 1,200,000 b. 1,250,000 c. 1,800,000 d. 1,890,000Problem 23-14 (AICPA Adapted) On October 1, 2014, Grimm Company consigned 40 freezers to Holden Company costing P 14,000 each for sale at P20,000 each and paid P16,000 in transportation costs. On December 30, 2014, 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 2014? a. 154,000 b. 170,000 c. 196,000 d. 200,000Problem 23-15 (AICPA Adapted) On December 1, 2014, Alt Department Store received 505 sweaters on consignment from Todd. Todd's cost for the sweaters was P800 cach, and they were priced to sell at P1,000. Alt’s commission on consigned goods is 10%. On December 31, 201 4, 5 sweaters remained. In the December 31, 2014 statement of financial position, what amount should be reported as payable for consigned goods? a. 490,000 b. 454,000 c. 450,000 d. 404,000