INTERMEDIATE ACCOUNTING 1 – REVIEWER

BACHELOR OF SCIENCE IN ACCOUNTANCY 2-1

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES – TAGUIG
PROF. U.C. VALLADOLID

MODULE 3 – INVENTORY

ADIAEN, Carmelyn D.
1. Under the concept of FOB shipping point
a. Ownership is transferred to the buyer upon the receipt of goods purchased
b. Ownership is transferred to the buyer upon the shipment of goods purchased
c. Ownership remains with the seller upon the shipment of the goods purchased
d. Ownership remains with the seller even if the buyer received the goods purchased

ADRIANO, Glecy C.
2. A purchase is recorded as a credit to accounts payable –
I. Without regard to cash discounts, if using the gross method.
II. Without regard to cash discounts, if using the net method.
III. As if the discount is to be taken, if using the gross method
IV. As if the discount is to be taken, if using the net method.

a. I and II
b. I and IV
c. II and III
d. II and I

ATONG, Jeahana Bairasha H.

3. Which inventory cost flow method is appropriate to use if the inventory items are not interchangeable?
a. FIFO method
b. Average method
c. Specific identification method
d. Relative sale value method

BALILING, Irish Sofiah R

4. PAS 2 – inventories prohibit which of the following cost flow methods?
a. LIFO
b. FIFO
c. Average
d. Specific identification

BARBAS, Bernadette C.
5. Goods held on consignment are
a. Kept for sale on the premises of the consignor
b. Never owned by the consignee
c. Included as part of no one’s ending inventory
d. Included in the consignee’s ending inventory

BATISLA-ON, Melchor A.
6. Ownership over inventories is normally transferred to the buyer
a. when the purchase price is fully paid
b. when legal title to the inventories is transferred
c. upon filling-up the sales order
d. upon shipment of the goods by the seller to the buyer

BERGADO, Fiel Olin D

7. Santos Company is taking a physical inventory on March 31, the last day of its fiscal year. Which of the
following must be included in this inventory count?
a. Goods in transit that Santos has sold to Atong Company, FOB shipping point
b. Goods that Santos is holding in inventory on March 31 for which the related Accounts Payable is 15 days past due
c. Goods in transit to Santos, FOB destination
d. Goods that Santos is holding on consignment for Carpio Company

BIGAY, Jackielou S.
8. Identify the incorrect statement regarding goods in transit.
a. Depending on the terms of a sales contract, goods in transit may form part of the inventories of the
buyer or the seller or, in rare cases, both the buyer and the seller.
b. Accounting procedures for goods in transit are normally performed only on inventory cut-off
c. Goods in transit form part of the inventory of the entity who holds legal title to the goods.
d. Accounting for goods in transit are normally performed by trading or manufacturing entities but not by
service-oriented entities

BOLAÑOS, Maria Magdaline A.

9. Which of the following is not true about perpetual inventory system?
a. Cost of goods sold is debited and Inventory is credited for each sale.
b. Purchases of merchandise are debited to Inventory.
c. Purchase returns and allowances and purchase discounts are debited to Inventory. Freight-in is credited to
Inventory.
d. Provides a continuous record of inventory and cost of goods sold.

BONAGUA, Khyla Alexandrei Q.

10. Which of the following factors determines whether or not goods shall be included in the inventory?
a. Legal title
b. Whether or not the purchase has been paid for
c. Management’s decision
d. Physical possession

CADAEG, Lia Desiree C.

11. Applying the legal test, all of the following items are includible in inventory except:
a. Goods out on consignment
b. Goods held by customers on approval or on trial
c. Goods in transit and purchased FOB shipping point
d. Goods in transit and sold FOB shipping point

CAPALAD, Ma. Alexandra Nicole H.

12. A consignment is a method of marketing goods in which the owner transfers physical possession of
certain goods to an agent who sells them on the owner’s behalf. That being said, consigned goods shall be
a. Included in consignor’s inventory and excluded from the consignee’s inventory
b. Excluded from consignor’s inventory and included in the consignee’s inventory
c. Included in both consignor’s and consignee’s inventory
d. Excluded from both consignor’s and consignee’s inventory

CARPIO, Princess Sharmaine Q.

13. An example of an inventory accounting policy that should be disclosed is
a. Identification of major suppliers
b. Effect of inventory profit caused by inflation
c. Classification of inventory into raw materials, work in process and finished goods.
d. Method used for inventory costing

CUERDO, Kristine C
14. During periods of rising process, when the FIFO inventory cost flow method is used, a perpetual
inventory system would
a. Not be permitted
b. Result in a lower ending inventory than a periodic inventory system
c. Result in the same ending inventory as a periodic inventory system
d. Result in a higher ending inventory as a periodic inventory system

DEL ROSARIO, Ma. Reimilyn M.

15. Which of the following should be taken into account when determining the cost of inventory?
a. Recoverable purchase tax
b. Abnormal freight in
c. Interest on Inventory Loan
d. Storage cost of part- finished goods

DELA CRUZ, Kimberly E.

16. Which method may be used to record a loss due to a price decline in the value of inventory?
a. Sales method
b. Loss method and cost of goods sold method
c. Cost of goods sold method
d. Loss method
DELOS SANTOS, Mary Rose L.
17. Statement 1 – the seller is compelled and actually paid for the freight charges under FOB shipping point –
freight prepaid.
Statement 2 – the buyer is compelled and actually paid for the freight charges under FOB shipping point
– freight collect.
a. Both statements are true
b. Both statements are false
c. Statement 1 is true, statement 2 is false
d. Statement 2 is true, statement 1 is false

DISOMIMBA, Jehanisah B.
18. Statement 1 – FIFO periodic and FIFO perpetual usually produce the same amount of ending inventory.
Statement 2 – FIFO periodic and FIFO perpetual usually produce the same amount of cost of goods sold.
Statement 3 – FIFO periodic and FIFO perpetual usually produce the same amount of cost of goods
available for sale.
Statement 4 – FIFO periodic and FIFO perpetual usually have the same process in accounting for
inventory.
a. Statements 1, 2, & 4 are true.
b. Statements 2 & 3 are false.
c. Only statement 1 is true.
d. Only statement 3 is false.
e. Only statement 4 is false.

EMBESTRO, Naida Alexis A.

19. Goods out on consignment must be included in the inventory of.
a. Consignor
b. Consignee
c. Both the consignor and the consignee
d. Neither the consignor nor the consignee

ENORE, Ronalyn M.
20.According to PAS 2 – inventories, the inventories are:
a. Allocated according to their respective groups.
b. Written down to NRV on a per classification basis.
c. Always stated at cost.
d. Written down to NRV on an item-to-item basis.

GIERZA, Carol B.
21. Which of the following statements is false regarding an assumption of inventory cost flow?
a. The cost flow assumption need not correspond to the actual physical flow of goods.
b. The assumption selected may be changed each accounting period.
c. The FIFO assumption uses the earliest acquired prices to cost the items sold during a period.
d. The LIFO assumption uses the earliest acquired prices to cost the items on hand at the end of an
accounting period.
GONZALES, Jamila Marie P.
22. At the end of the fiscal year, Gonzales Airlines has an outstanding non-cancellable purchase
commitment for the purchase of 1 million gallons of jet fuel at a price of P4.10 per gallon for delivery during
the coming summer. The company prices its inventory at the LCNRV. If the market price for jet fuel at the end
of the year is P4.50, how would this situation be reflected in the annual financial statements?
a. Record unrealized gains of P400,000 and disclose the existence of the purchase commitment.
b. No impact.
c. Record unrealized losses of P400,000 and disclose the existence of the purchase commitment.
d. Disclose the existence of the purchase commitment.

23. Ibarra Company is preparing the 2023 year-end financial statements. Prior to any adjustments,
inventory is valued at P7,800,000.

· Goods costing P254,000 were received from a vendor on January 5, 2024. The related invoice was
received and recorded on January 12, 2024. The goods were shipped December 31, 2023 FOB shipping
point.
· Goods costing P870,000 were shipped on December 31, 2023 to a customer FOB shipping point. The
goods were included in ending inventory for 2023 even though the sale was recorded in 2023.
· A P340,000 shipment of goods to a customer on December 31,2023 FOB destination was not included in
the year-end inventory.
· The goods cost P260,000 and were delivered to the customer on January 12, 2024. The sale was
properly recorded in 2024.
· An invoice for goods costing P250,000 was received and recorded as purchase in December 2023. The
related goods shipped FAS were in transit on December 31, 2023 and received on January 5, 2024 and were
not included in the physical inventory.

What is the correct inventory on December 31, 2023?

a. 7,880,000
b. 6,900,000
c. 7,774,000
d. 8,326,000

24. Labuzon Company reported inventory on December 31,2023 at P4,000,000 based on physical count
priced at cost and before any necessary adjustment for the following:

· Merchandise costing P200,000, shipped FOB shipping point from a vendor on December 30, 2023 was
received and recorded on January 6, 2024.
· Goods in the shipping area were excluded from inventory although shipment was not made until January
5, 2024. The goods billed to the customer FOB shipping point in December 2023 had a cost of P300,000.

What amount should be reported as inventory on December 31, 2023?

a. 4,500,000
b. 4,300,000
c. 4,000,000
d. 3,500,000
25. Liberato company conducted a physical count on December 31, 2023 which revealed merchandise with a
total cost of P8,000,000. However, further investigation revealed that the following items were excluded from
the count.

● Goods sold to a customer which are being held for the customer to call at the customer’s convenience with
a cost of P400,000.
● A packaging case containing a product costing P600,000 was standing in the shipping room when the
physical inventory was taken. The product was not included because it was marked “hold for shipping
instruction”. The investigation revealed that the customer’s order was dated December 28, 2023, but
that the case was shipped and the other customer billed on January 5, 2024.
● A special machine costing P450,000 fabricated to order for a customer was finished and specifically
segregated at the back part of the shipping room on December 31, 2023. The customer was billed on
the date and the machine was excluded from inventory although it was shipped on January 5,2024.
● Goods In process costing P600,000 held by an outside processor for further processing
● Goods costing P90,000 shipped by a vendor FOB seller on December 31, 2023 and received by the
entity on January 12, 2024.

What is the correct amount of inventory that should be reported on December 31, 2023?

a. 8,000,000
b. 8,670,000
c. 9,200,000
d. 9,290,000

26. Malaga Company regularly buys sweaters and is allowed a trade discount of 20% and 10%. The
entity made a purchase on March 20 and received an invoice with a list price of P900,000, a freight
charge of P50,000, and payment terms of net 30 days. What is the cost of the purchase?

a. 630,000
b. 680,000
c. 698,000
d. 648,000

27. Malit Company reported inventory on December 31, 2022 at P6,000,000 based on the physical count of
goods priced at cost, and before any necessary year-end adjustment returning to the following:

● Included in the physical count were goods billed to a customer FOB shipping point on December
31, 2022.

The goods has cost of P125,000, and were picked up by the carrier on January 10, 2023

● Goods shipped (FOB shipping point) on December 28, 2022 from a vendor to Liberato Company
were received on January 4, 2023. The invoice cost was P300,000.
What amount should be reported as inventory on December 31, 2022?

a. 6,000,000
b. 6,300,000
c. 5,875,000
d. 6,175,000

28. The following information is provided by Marange Company for the current year:

Inventory, January 1 500,000

Purchases 2,000,000
Freight in 100,000
Purchase return and allowance 120,000
Purchase discount 80,000
Sales 2,200,000
Sales return 100,000
Sales allowance 50,000
Sales discount 50,000
Gross profit rate on cost 25%

Under the gross profit method, what is the estimated cost of the inventory on December 31?

a. 825,000
b. 900,000
c. 800,000
d. 720,000

29. Masilang Company reported accounts payable on December 31, 2022 at P2,200,000 before considering
the following data:
● Goods shipped Masilang FOB shipping point on December 22, 2022 were lost in transit. The
invoice cost of P40,000 was not recorded by Bergado.

On January 7, 2023, Masilang filed a P40,000 claim against the common carrier.

● On December 27, 2022, a vendor authorized Masilang to return for full credit goods shipped and
billed at P70,000 on December 19, 2022.

The return goods were shipped by Masilang on December 28, 2022. A P70,000 credit memo was
received and recorded by Bergado on January 5, 2023.

● On December 31, 2022, Masilang has a P500,000 debit balance in accounts payable to Turilla, a
supplier, resulting from a P500,000 advance payment for food to be manufactured.

What amount should be reported as accounts payable on December 31, 2022?

a. 2,730,000
b. 2,670,000
c. 2,680,000
d. 2,170,000
30. Mendoza Company sells a new product. During a move to a new location, the inventory records for the
product were misplaced. The bookkeeper has been able to gather some information from the purchases and
sales records. The July purchases are as follows:
Quantity Unit Cost Total Cost

July 65 650,000
5 10,000

63 756,000
9 12,000

60 900,000
12 15,000

868,000
25 14,000 62

51,000 3,174,000
On July 31, 15,000 units were on hand. The sales for July amount to P 6,000,000, or 60,000 units at P 100 per
unit. Mendoza Company has always used a periodic FIFO inventory costing system. Gross profit on sales
for July was P 2,400,000.

What is the cost of inventory on July 1?

a. 2,354,000
b. 1,354,000
c. 1,054,000
d. 2,300,000

31. The balance in Montemayor Company’s inventory account on December 31, 2023 was P2,963,000 before
the following information was considered:

● Goods shipped, FOB destination on December 20, 2023 from a vendor to Montemayor were lost in
transit. The invoice cost of P65,000 was not recorded by Montemayor. On December 28, 2023,
Montemayor notified the vendor of the lost shipment.
● Goods were in transit from a vendor to Montemayor on December 31, 2023. The invoice cost was
P120,000 and the goods were shipped FOB shipping point on December 28, 2023. Montemayor received
the goods on January 1, 2024.

What amount of inventory should be reported in the December 31, 2023 statement of financial position?

a. 3,148,000
b. 2,898,000
c. 2,843,000
d. 2,963,000
32. The unadjusted physical inventory of Obane Company at December 31, 2023 was P8,000,000. Other
information follows:
● Goods were received and recorded on January 2, 2024 with a cost of P143,256. Information revealed
that the term of the shipment is FOB shipping point and these goods were shipped on December 29,
2023.
● Merchandise in the warehouse costing P72,000 was billed to the customer FOB shipping point on
December 29, 2023. These were excluded from inventory but these were shipped on January 3,
2024.

How much should Obane report as inventory in its December 31, 2023 statement of financial position?

a. 8,215,256
b. 8,143,256
c. 7,928,744
d. 8,072,000

33. Pagayunan Company had the following consignment transactions during December 2023.
Inventory shipped on consignment to Capalad Company P52,000
Freight paid by Cadaeg 2,600
Inventory received on consignment from Carpio 38,000
Freight paid by Carpio 1,200

No sales of consigned goods were made through December 31, 2023.

What amount of consigned inventory should be included in Pagayunan’s December 31, 2023 statement of
financial position?

a. 93,800
b. 41,800
c. 39,200
d. 54,600

34. The inventory on hand at December 31, 2023 for Palaspas Company is valued at a cost of P987,230. The
following items were not included in this inventory amount:

A. Purchased goods in transit, shipped FOB destination. Invoice price - P24,000, which includes
freight charges of P1,200.
B. Goods held on consignment by Palaspas at a sales price of P31,000, including sales commission of 20%
of the sales price.
C. Goods sold to Bergado Company, under terms FOB destination, invoiced for P42,300 which includes
P2,000 freight charges to deliver the goods. The goods are in transit.
D. Purchased goods in transit, terms FOB shipping point. Invoice price - P55,000. Freight costs, P3,000
E. Goods out on consignment to Sipat Company, sales price, P22,100. Shipping cost of P980.

Mark-up cost for all sales is 30%.

What is the correct cost of inventory to be reported in Palaspas’ financial statements?

a. 1,094,210
b. 1,036,210
c. 1,063,210
d. 1,049,230

35. The Physical count conducted in the warehouse of Panganiban Company on December 31, 2023 revealed
total cost of P3,600,000. However, the following items was excluded from the count:
● Goods sold to a customer which are being held for the customer to call for the customer’s convenience with
a cost of P200,000
● A packing case containing a product costing P80,000 was standing in the shipping room when the
physical inventory was taken. It was not included in the inventory because it was marked “hold for
shipping instruction”.
● Goods in process costing P300,000 held by an outside processor for further processing.
● Goods costing P50,000 shipped by a vendor FOB seller on December 28, 2023 and received
by Panganiban Company on January 10, 2024

What is the correct inventory on December 31, 2023?

a. 4,180,000
b. 4,230,000
c. 3,980,000
d. 4,030,000

36. Romano Company began operations late in 2010. For the first quarter ended March 31, 2023,
Cuerdo made available the following information:

● Total merchandise purchased through March 15, 2023, recorded at net

● Merchandise inventory on December 31, 2022, at selling price
● All merchandise was acquired on credit and no payments have been made on accounts payable since the
inception of the entity.
● All merchandise is marked to sell at 50% above invoice cost before time discounts of 2/10, n/30. No
sales were made in 2023.

What amount of cash is required to eliminate the current balance in accounts payable?

a. 6,000,000
d. 5,900,000
c. 6,400,000
d. 5,750,000
37. Santos Company provided the following for the current year:
Central warehouse
Beginning inventory 1,100,000
Purchases 4,800,000
Freight in 100,000
Transportation to consignees:
Freight out 300,000
Ending inventory 1,450,000

What is the cost of sale for the current year?

a. 4,550,000
b. 4,850,000
c. 5,070,000
d. 5,120,000

38. Sarmiento Company incurred the following costs:

Materials 700,000
Storage costs of finished goods 180,000
Delivery to customers 40,000
Irrecoverable purchase taxes 60,000

At what amount should the inventory be measured?

a. 880,000
b. 760,000
c. 980,000
d. 940,000

39. Segovia company in its balance sheet as of December 31, 2022 has an inventory of P1,760,000
which consist of:

Direct Materials 550,000

Direct materials purchased in transit, FOB Destination 120,000
Direct materials purchased in transit, FOB shipping point 110,000
Finished Goods 380,000
Goods in process 450,000
Goods sold in transit, delivered december 27, 2022 received
on January 7, 2023. FOB Destination. 120,000
What is the cost of inventory to be shown in the 2022 balance sheet?

a. 1,380,000
b. 1,590,000
c. 1,610,000
d. 1,730,000

40. Sipat Company has the following information pertaining to its merchandise inventory as of December
31, 2022.

Inventory on hand (including merchandise received

on consignment of P50,000) 230,000
Inventory purchased with buyback agreement 500,000
Merchandise in transit, FOB shipping point, excluding
Freight cost of 30,000 125,000
Merchandise in transit, Free alongside, including
deliver cost alongside the vessel of 15,000, but
excluding the cost of shipment for 12,000 250,000
Merchandise in transit, CIF (including the Insurance costs
and freight of 15,000) 175,000

What amount should Sipat Company report as value of its inventory in its 2022 statement of financial
position?

a. 749,000
b. 757,000
c. 763,000
d. 857,000

41. Sumanting Company had the following consignment transactions during the year 2022:

Inventory shipped on consignment to Olive, consignee 200,000

Inventory shipped on consignment to Oscar, consignee 400,000
Freight paid by Embestro with regards to the transferring
of the inventory 40,000
Inventory received on consignment from Brutus, consignor 900,000
Freight paid by Embestro with regards to the consigned
inventory received from Brutus. 200,000

How much should Sumanting include as consigned inventory in its December 31, 2022 statement of financial
position?

a. P600,000
b. P640,000
c. P840,000
d. P1,740,000

42. On December 25, 2022, Turilla Company purchased goods costing P1,000,000. The term was FOB
destination.
The following costs were incurred in connection with the sale and delivery of
goods: Packaging for shipment P 20,000
Shipping 30,000
Special Handling Charges 40,000
The goods were received on December 31, 2022.

In Turilla’s 2022 statement of financial position, how much of these goods should be included in inventory?

a. P1,000,000
b. P1,040,000
c. P1,070,000
d. P1,090,000

43. When you undertook the preparation of the financial statements for Verana at January 31, 2023, the
following data were available:
At Cost At Retail
Inventory, February 1, 2022 P 70,800 P 98,500
Markdowns 35,000
Markups 63,000
Markdown cancellations 20,000
Markup cancellations 10,000
Purchases 219,500 294,000
Sales 345,000
Purchases returns and allowances 4,300 5,500
Sales returns and allowances 10,000

The ending inventory at cost as of January 31, 2023, using the retail method:

a. 90,000
b. 58,500
c. 105,000
d. 52,000

44. The following information was available from the inventory records of Verdan Company for January:
Units Unit Cost Total Cost
Balance at January 1 3,000 P9.77 P29,310
Purchases:
January 6 2,000 10.30 20,600
January 26 2,700 10.71 28,917
 Sales:
January 7 (2,500)
January 31 (4,300)
Balance at January 31 900

1. Assuming that Verdan does not maintain perpetual inventory records, what should be the inventory at
January 31, using the weighted-average inventory method? Rounded to the nearest peso.

a. P9,454
b. P9,213
c. P9,234
d. P9,324

2. Assuming that Verdan maintains perpetual inventory records, what should be the inventory at January 31,
using the moving-average inventory method? Rounded to the nearest peso.

a. P9,454
b. P9,213
c. P9,234.
d. P9,324
ANSWER KEY:

1. B
2. B
3. C
4. A
5. B
6. B
7. B
8. A
9. C
10. A
11. D
12. A
13. D
14. C
15. D
16. B
17. D
18. E
19. A
20. D
21. A
22. D
23. C

Solution:
Inventory before adjustments P7,800,000
Goods purchased FOB shipping point 254,000
Goods sold FOB shipping point (870,000)
Goods sold FOB destination 340,000
Goods purchased FAS 250,000
Inventory, December 31, 2023 P7,774,000

24. A
Solution:
Physical count P4,000,000
Merchandise shipped FOB shipping point from a vendor on December 2023 200,000
Goods billed to the customer FOB shipping point on December 2023 300,000
Inventory, December 31, 2023 P4,500,000

25. D
Solution:
Physical count P8,000,000
Inventory marked “held for shipping instruction” 600,000
 Goods in process 600,000
Goods shipped by a vendor, FOB seller 90,000
Inventory, December 31, 2023 P9,290,000

26. C
Solution:
List price P900,000
Trade discount (20% x 900,000) (180,000)
P720,000
(10% x 720,000) (72,000)
Invoice price P648,000
Freight charge 50,000
Cost of purchase P698,000

27. B
Solution:
Physical Count 6,000,000

Goods Shipped (FOB Shipping Point) 300,000

Inventory P6,300,000

28. D
Solution:
Inventory, January 1 500,000

Net Purchases:

Purchases 2,000,000

Freight in 100,000

Purchase return and allowance (120,000)

Purchase discount (80,000) 1,900,000

Goods available for sale 2,400,000

Less Cost of Sales:

Sales 2,200,000

Sales return (100,000)

Net Sales 2,100,000

Cost of sale (2,100,000/125%) (1,680,000)

Inventory, December 31 720,000

29. B
Solution:
Accounts Payable per book 2,200,000

Goods Shipped (FOB Shipping Point) 40,000

Purchase Returns (70,000)

Advance Payments 500,000

Adjusted Accounts Payable P2,670,000

30. B
Solution:
Sales 6,000,000

Gross Profit (2,400,000)

Cost of Goods Sold 3,600,000

Inventory, July 31 928,000

Goods available for sale 4,528,000

Purchases (3,174,000)

Inventory, July 1 1,354,000

31. C
Solution:
Balance per books P2,963,000
Goods in transit shipped FOB shipping point (120,000)
Correct balance, December 31, 2023 P2,843,000

32. A
Solution:
Physical inventory before adjustments, 12/31/23 P8,000,000
Goods in transit shipped FOB shipping point on 12/29/23 143,256
Merchandise in the warehouse excluded from the physical
count, shipped on 01/03/24 72,000
Inventory, as adjusted, 12/31/23 P8,215,256
33. D
Solution:
Inventory shipped on consignment to Capalad Company P52,000
Freight paid by Cadaeg 2,600
Total inventory on consignment P54,600

34. A
Solution:
Per count P987,230
Item C - goods sold in transit, FOB destination
(P42,300 - 2,000 / 130%) 31,000
Item D - purchases in transit, FOB shipping point
(P55,000 + 3,000) 58,000
Item E - goods out on consignment
(P22,100 / 130% + 980) 17,980
Correct cost of inventory P1,094,210

35. D
Solution:
Inventory per physical count 3,600,000
Inventory marked “hold for shipping instruction” 80,000
Goods in process inventory 300,000
Goods shipped FOB seller 50,000
Correct Inventory 4,030,000

36. A
Solution:
Gross purchases through March 15, 2023 (4,900,000/98%) 5,000,000
Inventory- December 31, 2022, at cost (1,500,000/150%) 1,000,000
Total gross amount to be paid 6,000,000

37. D
Solution:
Beginning inventory 1,220,000
Purchases 5,400,000
Freight in (100,000 + 50,000) 150,000
Goods available for sale 6,770,000
Ending inventory (1,650,000)
Cost of sales 5,120,000

38. B
Solution:
Materials 700,000
Irrecoverable purchase taxes 60,000
 Total cost of inventory 760,000

39. C
Solution:
Direct Materials 550,000
Direct Materials purchased, FOB shipping point 110,000
Finished Goods 380,000
Goods in process 450,000
Goods sold in transit, FOB Destination 120,000
Total inventory to be reported at the end of the year 1,610,000

40. B
Inventory on hand (230,000 - 50,000) 180,000
Merchandise in transit, FOB shipping point (125,000 + 30,000) 155,000
Merchandise in transit, Free alongside (250,000 - 15,000 + 12,000) 247,000
Merchandise in transit, CIF 175,000
Amount of inventory to be reported at the end of the period 757,000

41. B
Inventory shipped on consignment to Olive, consignee 200,000
Inventory shipped on consignment to Oscar, consignee 400,000
Freight paid by Montemayor with regards to the transferring
of the inventory 40,000
Inventory Consigned 640,000

42. A
Purchase price 1,000,000

43. B
Solution:
At Cost At Retail
Beginning inventory, 2/1/22 P 70,800 P 98,500
Purchases P 219,500 P 294,000
Less purchase returns 4,300 215,200 5,500 288,500
Totals P 286,000 387,000
Add markups (net) 53,000
Totals 440,000
Deduct markdowns (net) (15,000)
Sales price of goods available 425,000
Net sales (335,000)
Ending inventory, 1/31/23 at retail P 90,000
Ending inventory at cost: Ratio of cost to retail =
 P286,000 ÷ P440,000 = 65%;
P90,000 × 65% = P58,500 P 58,500

44. 1. B
Solution:
Total cost
Balance, Jan 1 P29,310
Purchases
Jan 6 20,600
Jan 26 28,917 49,517
Total 78,827
Units
Balance, Jan 1 3,000
Purchases
Jan 6 2,000
Jan 26 2,700 4,700
Total 7,700

Cost 78,827
Divided by units 7,700
10.237 units
Multiply by 900
Inventory, Jan 31 P9,213

2. D
Solution:
Average on Jan 6
Balance, Jan 1 29,310 3,000 units
Purchases, Jan 6 20,600 2,000 units
Total P49,910 / 5,000 units
= P9.982/unit

Average on Jan 26
Balance, Jan 6 (2.5k x 9.982) 24,955 2,500 units
Purchases, Jan 26 28,917 2,700 units
Total P53,872 / 5,200 units
= P10.36/unit
P10.36 × 900
= P9,324 - Inventory, Jan 31