ACC 151

EXERCISE - INVENTORIES

PROBLEM 1
Your Song Company uses the FIFO retail method of inventory valuation.
The following information is available:

@Cost @Retail
Beginning Inventory P145,000.00 P160,000.00
Purchases (net) 283,920.00 420,800.00
Additional markups 25,200.00
Mark up cancellations 9,200.00
Markdowns 38,100.00
Markdown cancellations 6,900.00
Sales revenue 450,000.00
Sales returns 15,200.00
Sales discounts 3,800.00

What would be the estimated cost of ending inventory using:

1. Conventional/Conservative Method
2. Average Method
3. FIFO- Conventional Method
4. FIFO – Average

PROBLEM 2
The retail inventory method is used by FILAY Company. The records of inventory, purchases, and sales
for the year 2022 are given below:

@Cost @Retail
Beginning Inventory P185,700.00 P202,000.00
Purchases 339,380.00 458,000.00
Purchase Allowance 11,000.00
Freight In 7,300.00
Departmental Transfer in 2,000.00 3,000.00
Additional Markups 12,000.00
Markup cancellations 2,500.00
Inventory Shortage 7,000.00
Sales (including sales of 374,000.00
P4,500 which were
marked down from
P6,000)

1. Compute the cost of the ending inventory using:

a. Average retail method
b. FIFO retail method
2. Compute the cost of goods sold under the:
a. Average retail method
b. FIFO retail method