Chapter 10: Inventories

Problem #1-1
ACCOUNT TITLE- Periodic DEBIT CREDIT
01. Purchases P800,000
Accounts Payable P800,000
#
02. Accounts Payable 50,000
Purchase Return 50,000
#
03. Accounts Payable 600,000
Cash 600,000
#
04. Accounts Receivables 1,580,000
Sales 1,580,000
#
05. Sales Returns & Allowances 40,000
Accounts Receivables 40,000
#
06. Cash 1,360,000
Accounts Receivable 1,360,000
#
07. Merchandise Inventory - end 60,000
Income Summary 60,000
ACCOUNT TITLE - Perpetual DEBIT CREDIT
01. Merchandise Inventory P800,000
Accounts Payable P800,000
#
02. Accounts Payable 50,000
Merchandise Inventory 50,000
#
03. Accounts Payable 600,000
Cash 600,000
#
04. Accounts Receivables 1,580,000
Sales 1,580,000
#
05. Sales Returns & Allowances 40,000
Accounts Receivables 40,000
#
06. Cash 1,360,000
Accounts Receivable 1,360,000
#
07. Inventory Shortage 10,000
Merchandise Inventory 10,000

Problem #1-2
Periodic Inventory System
Beginning Bal. 90,000
Add:Purchases 800,000
Less:Purchase Returns (50,000) 750,000
Goods Available for Sale 840,000
Less:Ending Inventory (60,000)
Cost of Goods Sold 780,000

Perpetual Inventory System

Beginning Bal. 90,000
Add:Purchases 800,000
Less:Purchase Returns (50,000) 750,000
Less:Merchandise Inventory (10,000)
Goods Available for Sale 830,000
Less:Ending Inventory (60,000)
Cost of Goods Sold 770,000
Add: Inventory Shortage 10,000
Adjusted Cost of Goods Sold 780,000
Problem 2-1
1.Invoice Price
(List Price 500,000 x 80% x 90% x 90%) 324,000
Less: Cash Discount (324 000 x 0.02) (6,840)
Payment within discount period 317,520

2. Invoice Price (500,000 x 65%) 325,000

Less: Cash Discount (325 000 x 0.02) (6,500)
Payment within discount period 318,500

Problem 3-1
ACCOUNT TITLE- Gross Method DEBIT CREDIT
Purchases 4,750,000
Accounts Payable 4,750,000
#
Freight in 250,000
Cash 250,000
#
Accounts Payable 1,650,000
Cash 1,617,000
Purchase Discount 33,000
#
Accounts Payable 2,100,000
Cash 2,100,000
#
Merchandise Inventory 1,000,000
Income Summary 1,000,000
ACCOUNT TITLE - Net Method DEBIT CREDIT
Purchases 4,655,000
Accounts Payable 4,655,000
#
Freight in 250,000
Cash 250,000
#
Accounts Payable 1,617,000
Cash 1,617,000
#
Accounts Payable 2,058,000
Purchase Discount Lost 42,000
Cash 2,100,000
#
Purchase Discount Lost 20,000
Accounts Payable 20,000
#
Merchandise Inventory 981,000
Income Summary 981,000

Problem 3-2
GROSS METHOD
Purchases 4,750,000
Freight in 250,000
Total 5,000,000
Less: Purchase Discounts (33,000)
Goods Available for Sale 4,967,000
Less: Merchandise Inventory (1,000,000)
Cost of Goods Sold 3,967,000

NET METHOD
Purchases 4,655,000
Freight in 250,000
Goods Available for Sale 4,905,000
Less:Merchandise Inventory 981,000
Cost of Goods Sold 3,924,000
Problem 4
ACCOUNT TITLE- Gross Method DEBIT CREDIT
Merchandise Inventory 1,000,000
Accounts Payable 1,000,000
#
Merchandise Inventory 50,000
Cash 50,000
#
Accounts Payable 800,000
Cash 784,000
Merchandise Inventory 16,000
#
Accounts Payable 100,000
Cash 100,000
#
Cash 1,200,000
Sales 1,200,000

Cost of Goods Sold 723,800

Merchandise Inventory 723,800
ACCOUNT TITLE- Net Method DEBIT CREDIT
Merchandise Inventory 980,000
Accounts Payable 980,000
#
Merchandise Inventory 50,000
Cash 50,000
#
Accounts Payable 784,000
Cash 784,000
#
Accounts Payable 196,000
Purchase Discount Lost 4,000
Cash 200,000
#
Cash 1,200,000
Sales 1,200,000
#
Cost of Goods Sold 723,800
Merchandise Inventory 723,800
Problem 5
ACCOUNT TITLE DEBIT CREDIT
Merchandise Inventory 50,000
Income Summary 50,000
#
Accounts Payable 75,000
Purchases 75,000
#
Purchases 30,000
Accounts Payable 30,000
Merchandise Inventory 30,000
Income Summary 30,000
#
Income Summary 90,000
Merchandise Inventory 90,000
#
Purchases 140,000
Accounts Payable 140,000

Problem 6
Inventories Accounts Net Sales
Payable
Unadjuste 1,250,000 9,000,000 2,000,000
d
A (165,000) (165,000)
B (20,000)
C 40,000
D 210,000
E 25,000 25,000
Adjusted 1,300,000 860,000 9,040,000

Problem 7
Inventories Accounts Net Sales
Payable
Unadjuste 1,750,000 1,200,000 8,500,000
d
A (35,000)
B 50,000 50,000
C 20,000
D 26,000 (40,000)
E 25,000
F 30,000
G 60,000
H 10,000 20,000
Adjusted 1,911,000 1,330,000 8,425,000

Problem 8.
Items counted in the bodega 4,000,000
Items included in the count specifically segregated (100,000)
Items in returned by customer 50,000
Items ordered and in the receiving department, 400,000
Items shipped today, invoice mailed, FOB destination 150,000
Items for window display 200,000
Items on counter for sale 800,000
Items in receiving department, refused
by us because of damage 180,000
Items included in count, damaged and unsalable ( 50,000)
Items in the shipping department 250,000
Total correct amount of inventory P5,700,000

Problem 9
Finished goods in the storeroom 2,000,000
Finished goods held by salesmen, 100,000
Goods in process 900,000
Materials 1,000,000
Factory supplies:
Gasoline and oil for testing finished goods 100,000
Machine lubricants 300,000
Total inventory 4,400,000

Problem 10
Answer: P500,000
Why? The Terms were FOB Destination, Freight Cost is not included

Problem 11
Materials 700,000
Irrecoverable Taxes 60,000
Total cost of Inventory 760,000

Problem 12
Inventory shipped on consignment to a consignee 600,000
Freight paid by Stone Company 50,000
Consigned Inventory 650,000
Problem 13.
Materials 1,400,000
Goods in process 650,000
Finished goods in factory 2,000,000
Finished goods in company-owned retail store,
including 50% profit on cost(750,000/150%) 500,000
Finished goods in hands of consignee(400,000x60%) 240,000
Finished goods in transit 250,000
Finished goods out on approval 100,000
Materials in transit (330,000+30,000) 360,000
Total inventory 5,500,000

Problem 14
Markup of goods out of consignment (1,500,000 x 30%) 450,000
Goods held on Consignment 900,000
Total Reduction 1,350,000

Problem 15
Cost of purchases 5,000,000
Import duties 400,000
Freight and insurance 1,000,000
Other handling cost 100,000
Brokerage commission 200,000
Total cost of purchases 6,700,000