Inventory - Part 2.docx - Problem 1 The company inventory...

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Problem 1: The company inventory transaction for 2016 were as follows: Qty Unit Cost 1-Jan balance 6,000.00 8.20 Purchases at the end of each quarter 1st 11,000.00 8.25 2 nd 13,000.00 8.10 3 rd 8,000.00 7.95 4th 12,000.00 7.75 Sales for the year 2016 was for 35,000 units The company inventory policy is to report inventory at lower of cost or net realizable value. At the end of the year the company estimated the NRV of the inventory at P7.63 per unit. Required 1. Compute for the COGS and Inventory End before any adjustment loss assuming (1) FIFO (2) Average method is used. 2. Determine the Loss on Inventory write-down under (1) FIFO, (2) Average Problem 2 Using the information in Problem #1 and assume further that the company has entered in a contract to purchase 50,000 units from the supplier at P8.00 per unit. And that the end of the year goods can be purchase at P7.75. How much would be the amount of Loss or Gain on Purchase Commitment to be reported in the 2016 income statement. Problem 3: The Sarsi Company fiscal period ends on December 31,2017. The company utilizes physical inventory procedures. The certified public accountant was employed after the end of the year and, therefore, could not observe the physical inventory. As a result, a particularly critical examination was made of the inventory records, purchases, and sales. The following errors were found in the course of the examination: Merchandise costing P10,000, was put on consignment to the Rose Company and was included in the final inventory. The merchandise had not been recorded as a sale. Merchandise in transit costing P24,000, was excluded from inventory, although the shipment was f.o.b. shipping point. The purchase had been recorded. Merchandise costing P18,000, and sold for P26,000, was included in the final inventory. The sale was recorded. Since the goods were in transit; the inventory clerk failed to note that the goods were shipped f.o.b. shipping point. Merchandise costing P14,000, was included in the final inventory. The goods had been rejected because of incorrect specifications and were being held for return to the vendor. The merchandise had been recorded as a purchase. Merchandise costing P8,000, was excluded from the final inventory, and the sale at P10,000, was not recorded. The goods had been specifically segregated, however, according to the terms of the contract of sale title did not pass until actual delivery. Merchandise in transit costing P16,000, was excluded from inventory, and the purchase was not recorded. The goods had been shipped by the vendor f.o.b. shipping point. Merchandise costing P36,000, was excluded from the inventory, the sale at P40,000, was recorded. The goods had been segregated in the warehouse for shipment; there was no contract for sale, merely a purchase order from the customer.
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