Inventory (Basic Problems)

62. Zilong Company provided the following information in Compute the correct amount of inventory.
relation to an inventory: A. 2,500,000
Materials 350.000 B. 2,550,000
Irrecoverable purchase taxes 30.000 C. 2,625,000
Storage costs of finished goods 90.000 D. 2,640,000
Import duties 60.000 66. Wanwan Company specialized in the sale of IBM
Delivery to customers 20,000 compatibles and software packages. The entity had the
following transactions with one of the suppliers:
At what figure should inventory be measured?
A. 380,000 Purchase of IBM compatibles 850,000
B. 440,000 Purchase of commercial software packages 600,000
C. 470,000 Purchase return and allowance 25,000
D. 490,000 Purchase discount taken 8,500
63. Tigreal Company provided the following data for the current
year: Purchase were made throughout the year on terms 2/10,
Merchandise purchased for resale 2,000,000 n/30. All returns and allowances took place within 5 days of
Interest on inventory loan 100,000 purchase and prior to any payment on account.
Purchase returns 10,000
Transportation in 50,000 What is the purchase discount lost?
Transportation out 25,000 A. 8,500
B. 20,000
What is the inventoriable cost of the purchase? C. 20,500
A. 2,015,000 D. 28,500
B. 2.040.000 67. On June 1, 2022 Valentina Company sold merchandise
C. 2,065,000 with a list price of P2,000,000 to a customer. The entity
D. 2,140,000 allowed trade discounts of 20% and 10%. Credit terms
64. Terizla Company purchased motorcycles from various were 5/10, n/30 and the sale was made FOB shipping
countries for export to other countries. point.

The entity incurred the following costs during the current The entity prepaid P100,000 of delivery cost for the
year: customers as an accommodation. The customer paid in full
on June 11, 2022.
Costs of purchase based on vendors
invoices 2,500,000 What amount is received from the customer as full
Trade discounts on purchase already remittance?
deducted from vendors invoices 250,000 A. 1,368,000
Sales commission 150,000 B. 1,440,000
Salaries of accounting department 300.000 C. 1,468,000
Others handling costs relating to D. 1,540,000
imports 50,000 Inventory Inclusion
Import duties 200,000 68. Esmeralda Company's inventory at December 31, 2022
Freight and insurance on purchases 500,000 was P750,000 based on a physical count of goods priced
Brokerage commission paid to agents at cost, and before any necessary year-end adjustments
for arranging imports 100,000 relating to the following:
After-sales warranty costs 125,000 a.) Included in the physical count were goods billed to
customer FOB shipping point on December 31, 2022
What is the total cost of the purchases? These goods had a cost of P15,000 and were picked
A. 2,850,000 up by the carrier on January 10, 2023.
B. 3,050,000 b.) Goods shipped FOB shipping point on December 28,
C. 3,250,000 2022 from a vendor to Esmeralda were received on
D. 3,350,000 January 4, 2023. The invoice cost was P25,000.
65. Sun Company included the following items under
inventories: What amount should Esmeralda report as inventory on its
Materials P700,000 December 31, 20227
Advance for materials ordered 100,000 A. 735,000
Unsalable finished goods at cost 25,000 B. 740,000
Unexpired on insurance on inventories 30,000 C. 760,000
Office supplies 20,000 D. 775,000
Materials in transit shipped FOB shipping 69. Silvanna Company reported accounts payable on
point, excluding freight of P15,000 165,000 December 31, 2022 at P2,250,000 Before any necessary
Goods in process 325,000 year-end adjustments relating to the following transactions:
Goods held on consignment, at sales
price, cost P75,000 100,000  On December 27, 2022, Silvanna Company wrote and
Finished goods out on approval, at cost 50,000 recorded checks to creditors totaling P1,000,000
Finished goods in transit to customers, causing an overdraft of P250,000 in Silvanna
shipped FOB point of shipment 125,000 Company's bank account on December 31, 2022. The
Finished goods in hands of consignees, checks were mailed out on January 10, 2023.
including 25% profit on cost 375,000  On December 28, 2022, Silvanna Company purchased
Finished goods in factory 75,000 and received goods for P375,000 terms 2/10, n/30.
Finished goods in company-owned retail Silvanna Company records purchases and accounts
store, including 40% profit on sales P700,000 payable at net amount. The invoice was recorded and
Advertising catalogs and shipping cartons 100,000 paid January 5, 2023.
  Goods shipped FOB destination, 5/10, n/30 on Merchandise in transit purchased on
December 20, 2022 from a vendor to Silvanna terms:
Company were received January 15, 2023. The invoice FOB shipping point P330,000
cost was P162,500. FOB destination 200,000
Merchandise out on consignment at sales
On December 31 2022 what amount should be reported as price (including mark-up of 30% on cost) 280,000
accounts payable? Merchandise sent to customer for
A. 3,617,500 approval (cost of goods P64,000) 83,200
B. 3,625,000 Merchandise held on consignment 72,000
C. 3,776,500
D. 3,787,500 Based on the given information, the inventory account at
70. Vexana Company's accounts payable balance at December 31, 2022 should be reduced by
December 31, 2022 was P1,800,000 before considering A. 303,200
the following transactions: B. 355,815
C. 375,200
a.) Goods were in transit from a vendor to Vexana on D. 413,815
December 31, 2022. The invoice price was P100,000,
and the goods were shipped FOB shipping point on
December 29, 2022. The goods were received on
January 4, 2023.
b.) Goods shipped to Vexana, FOB shipping point on
December 20, 2022, from a vendor were lost in
transit. The invoice price was P50,000. On January 5,
2023, Vexana filed a P50,000 claim against the
common carrier.
c.) On December 27, 2022, a vendor authorized Vexana
to return, for full credit, goods shipped and billed at
P35,000 on December 2, 2022. The returned goods
were shipped by Vexana on December 27, 2022. A
P35,000 credit memo was received and recorded by
Vexana on January 6, 2023.
d.) Goods shipped FOB destination on December 21,
2022 from a vendor to Vexana were lost in transit. The
invoice cost of P45,000 was not recorded by Vexana.
On December 28, 2022, Vexan notified of the lost
shipment.

In its December 31, 2022 statement of financial position,

Vexana should report accounts payable of
A. 1,865,000
B. 1,910,000
C. 1,915,000
D. 1,960,000
71. Valir Company's usual sales terms are net 60 days, FOB
shipping point. Sales, net of returns and allowances,
totaled P2,300,000 for the year ended December 31, 2022,
before year-end adjustment. Additional data are as follows:

a.) On December 27, 2022, Valir authorized a customer

to return, for full credit, goods shipped and billed at
P50,000 on December 15, 2022. The returned goods
were received by Valir on January 4, 2023, and a
P50,000 credit memo was issued on the same date.
b.) Goods with an invoice amount of P80,000 were billed
to a customer on January 3, 2023. The goods were
shipped on December 31, 2022.
c.) On January 5, 2023, a customer notified Valir that
goods billed and shipped on December 23, 2022,
were lost in transit. The invoice amount was
P100,000.
d.) Goods with an invoice amount of P200,000 were
billed and recorded on December 30, 2022. The
goods were shipped on January 3, 2023.

Valir's adjusted net sales for 2022 should be

A. 2,030,000
B. 2,130,000
C. 2,230,000
D. 2,330,000
72. An analysis of the ending inventory account of Edith
Corporation on December 31, 2022 disclosed the inclusion
of the following items:
73. Zhask Company had the following consignment A. 3,800,000
transactions during 2022: B. 4,690,000
Inventory shipped on consignment to Yin C. 4,920.000
Company, P300,000 D. 5,300,000
Freight paid by Zhask 20,000
Inventory received on consignment from 77. Franco Company counted the ending inventory on
Xavier Company 500,000 December 31, 2022. The entity reported inventory before
Freight paid by Xavier 50,000 any corrections at P2,000,000.

No sales of consigned goods were made through None of the following items were included when the total
December 31, 2022. In its December 31, 2022, statement amount of the ending inventory was computed:
of financial position, Zhask should include consigned
inventory of Goods located in the entity's warehouse are
A. 300,000 on consignment from another entity 150,000
B. 320,000 Goods sold by the entity and shipped FOB
C. 800,000 destination were in transit on December 31,
D. 950,000 2022 and received by the customer on
January 2, 2023 200,000
74. On October 20, 2022, Vale Company consigned 40 Goods purchased by the entity and shipped
freezers to Uranus Company costing P7,000 each for sale FOB shipping point were in transit on
at P10,000 each and paid P8,000 in transportation costs. December 31, 2022 and received by the
On December 30, 2022, Uranus reported the sale of 10 entity on January 2, 2023 300,000
freezers and remitted P85,000. The remittance was net of Goods sold by the entity and shipped FOB
the agreed commission. What amount should Vale shipping point were in transit on December
recognize as consignment sales revenue for 2022? 31, 2022 and received by the customer on
A. 77,000 January 2, 2023 400,000
B. 85,000
C. 98,000 What amount of inventory should be reported on December
D. 100,000 31, 2022?
75. On December 1, 2022, Thamuz Company received 1,000 A. 2,350,000
sweaters on consignment from a consignor. The cost for B. 2,500,000
the sweaters was P400 each, and the sweaters were C. 2,750,000
priced to sell at P500 each. The commission on consigned D. 2,900,000
goods is 10%. On December 31, 2022, 100 sweaters 78. On December 15, 2021, Barats Company sold 20,000 units
remained. On December 31, 2022, what amount should be at P250 per unit. The entity granted the customers a right
reported as payable for consigned goods? to return within 30 days if not satisfied and will receive
A. 360,000 either a full refund if cash was already paid or a full credit
B. 405,000 for the amount owed to the entity. It is estimated that 6% of
C. 450,000 the units sold will be returned within the 30-day period. The
D. 500,000 cost for each unit is P175. The entity uses the perpetual
76. A physical count on December 31, 2022 revealed that inventory method. What amount of sales revenue be
Faramis Company had inventory with a cost of P4,410,000. recognized on December 15, 2021?
A. 4,700,000
The following items were excluded from this amount: B. 5,000,000
C. 2,500,000
 Merchandise of P610,000 is held by Faramis on D. 0
consignment 79. Using the same info above, what amount of refund liability
 Merchandise costing P380,000 was shipped by should be recorded on December 15, 20217
Faramis FOB destination to a customer on December A. 0
31,2022 B. 210,000
C. 300,000
The customer was expected to receive the goods on D. 510,000
January 5, 2023. 80. What amount should be recorded as cost of recover asset
on December 15, 20217
 Merchandise costing P460,000 was shipped by A. 0
Faramis FOB shipping point to a customer on B. 150,000
December 29, 2022. C. 210,000
D. 300,000
The customer was expected to receive the goods on 81. What amount of cost of goods sold should be reported on
January 10, 2023 December 15, 2021?
A. 0
 Merchandise costing P830,000 shipped by a vendor B. 3,200,000
FOB destination on December 31, 2022 was received C. 3,290,000
by Faramis on January 15, 2023. D. 3,500,000

 Merchandise costing P510,000 purchased FOB

shipping point was shipped by the supplier on
December 31, 2022 and received by Faramis on
January 5,2023.

What amount of inventory should be reported on December

31,2022?
 INVENTORY COST FLOW The entity transferred 195,000 units of raw materials to
work in process during the year.
Eudora Company is a wholesaler of scented perfumes. The
activity for item #110387 during November is presented Work in process, beginning 50,000 units at P14
below: Direct labor P3,100,000
Manufacturing overhead 2,950,000
Date Transaction Units Cost Work in process, ending 48,000 units at P15
Nov, 1 Inventory 6,000 20
balance The entity used the FIFO method for valuing inventory.
Nov. 4 Purchases 9,000 24 88. What is the cost of raw materials used?
Nov. 12 Sales 10,800 A. 1,485,000
Nov. 19 Purchases 14,400 26 B. 1,530,000
Nov. 22 Sales 11,400 C. 2,250,000
Nov. 29 Purchases 4,800 27 D. 3,015,000
89. What is the total manufacturing cost
A. 7,535,000
82. Under the FIFO periodic inventory system, how much is the
B. 7,580,000
ending inventory of item #110387 at November 30?
C. 8,300,000
A. P278,400
D. 9,065,000
B. P280,800
90. What is the cost of goods manufactured for the current
C. P302,400
year?
D. P316,800
A. 7,515,000
83. Under the FIFO perpetual inventory system, how much is
B. 7,535,000
the ending inventory of item #110387 at November 30?
C. 8,235,000
A. P278,400
D. 8,280,000
B. P280,800
C. P302,400
LOWER OF COST AND NET REALIZABLE VALUE
D. P316,800
(LCNRV)
84. Using the same data above, under the weighted average
91. Melissa Company determined the year-end inventory on a
cost periodic inventory system, how much is the ending
FIFO basis at P4,000,000. The entity provided the following
inventory of item #110387 at November 30?
Information pertaining to the inventory:
A. P278,400
Estimated selling Price P4,050,000
B. P294,720
Estimated cost of disposal 200,000
C. P310,914
Normal profit margin 500,000
D. P316,800
Current replacement cost 3,500,000
85. Using the same data above, under the weighted average
cost perpetual inventory system, how much is the ending
The entity measured inventory at the lower of cost and net
inventory of item #110387 at November 307
realizable value. What is the carrying amount of the
A. P278,400
inventory at year-end?
B. P294,720
A. 3,350,000
C. P310,914
B. 3,500,000
D. P316,800
C. 3,850,000
E.
D. 4,000,000
Jawhead's Clothing Store sells jeans. During January 2021, its
92. Karrie Company is a retailer of Italian furniture and has five
inventory records for one brand of designer jeans were as
major product lines. At year-end, the entity provided the
follows:
following data:
Beginning inventory 10 pairs at P20
Units Unit cost NRV per
January 6 Purchase 4 pairs at P25
unit
January 10 Sale 5 pairs
Sofas 100 1,000 1,020
January 15 Purchase 7 pairs at P30
Dining Tables 200 500 450
January 20 Sale 10 pairs
Beds 300 1,500 1,600
January 25 Purchase 4 pairs at P30
Closets 400 750 770
Lounge chains 500 250 200
86. How much is the cost of goods sold using the periodic
FIFO?
What is the inventory at year-end using the LCNRV?
A. 250
A. 1,040,000
B. 300
B. 1,075,000
C. 330
C. 1,998,000
D. 430
D. 2,033,000
87. How much is the cost of goods sold using the average cost
method?
On November 15, 2017, Moskov Company entered into a
A. 236
commitment to purchase 10,000 ounces of gold on
B. 265
February 15, 2018 at a price of P310 per ounce. On
C. 358
December 31, 2017, the market price of gold is P270 per
D. 378
ounce. On February 15, 2018, the price of gold is P300 per
ounce.
Guinevere Company accumulated the following data for the
current year.
93. What is the loss on purchase commitment to be recognized
Raw materials, beginning 90,000 units at P7.00
on December 31, 2017?
Purchases 75,000 units at P8.00
A. 0
Purchases 120,000 units at P8.50
B. 100,000
C. 300,000
D. 400,000
94. What is the gain on purchase commitment to be
recognized on February 15, 2018? Beginning inventory 650,000
A. 0 Purchases 2,300,000
B. 100,000 Purchase returns 80,000
C. 300,000 Freight in 60,000
D. 400,000 Sales 3,400,000
95. What amount should be debited to purchases on February Sales discounts 20,000
15, 2018? Sales returns 30,000
A. 2,700,000
B. 3,000,000 At the year-end, a physical inventory revealed that the
C. 3,100,000 ending inventory was only P420,000. The gross profit on
D. 3,500,000 sales has remained constant at 30%. The entity suspects
96. What amount should be recognized as accounts payable that some inventory may have been pilfered by one of the
on February 15, 2018? employees. What is the estimated cost of missing inventory
A. 2,700,000 at year-end?
B. 3,000,000 A. 151,000
C. 3,100,000 B. 165,000
D. 3,500,000 C. 420,000
97. At the beginning of the current year, Natan Company D. 585,000
purchased a tract of land for P12,000,000 the entity
incurred additional cost of P3,000,000 during the remainder Valir Company reported the following information for the
of the year in subdividing the land for sale. Of the tract current year.
acreage 70% was subdivided into residential lots and 30%
was conveyed to the city for roads and a park the tract was Beginning inventory 5,000,000
subdivided into residential lots as following: Purchases 26,000,000
Lot class Number of lots Sale price per lot Freight in 2,000,000
A 100 240,000 Purchase returns and allowances 3,500,000
B 100 160,000 Purchase discounts 1,500,000
C 200 100,000 Sales 40,000,000
Sales returns 3,000,000
Using the relative sales value method what amount of cost Sales allowances 500,000
should be allocated to Class A lots? Sales discounts 1,000,00
A. 3,000,000
B. 3,750,000 A physical inventory taken at year-end resulted in an
C. 6,000,000 ending inventory costing P4,000,000. At year-end, unsold
D. 7,200,000 goods out on consignment with selling price at P1,000,000
98. Edith Company manufactures bath towels. The production are in the hands of a consignee. The gross profit was 40%
comprises 60% of Class A" which sells for P500 per dozen on sales.
and 40% of "Class B" which sells for P250 a dozen. During
the current year 60,000 dozens were produced at an 101. What is the cost of goods available for sale?
average cost of P360 a dozen the inventory at the end of A. 28,000,000
the current year was as follows: B. 29,500,000
2,200 dozens "Class A" @ P360 792,000 C. 31,000,000
3,000 dozens "Class B' @ P360 1,080,000 D. 33,000,000
Total inventory 1,872,000 102. What is the cost of goods sold?
A. 21,300,000
Using the relative sales value method which management B. 21,900,000
considers as a more equitable basis of cost distribution C. 22,200,000
what is the measurement of the inventory? D. 24,000,000
A. 1,170,000 103. What, is the estimated cost of inventory shortage?
B. 1,665,000 A. 1,200,000
C. 1,872,000 B. 1,800,000
D. 2,340,000 C. 2,100,000
D. 2,700,000
GROSS PROFIT METHOD
99. Ruby Company has a recent gross profit history of 40% of 104. On October 15, 2020, a fire destroyed all the stock of
net sales. The following data are available from the equipment of MLBB Center in its rented stockroom. The
accounting records for the three months ended March 31: records of the firm show the following information:
2019 2018 2017 2016
Inventory-January 1 650,000 Sales 925,000 880,000 710,000 790,000
Purchases 3,200,000 Cost of
Net sales 4,500,000 sales 758,500 739,200 624,800 679,400
Purchase return 75,000
Freight in 50,000 Inventory, January 1, 2020 P130,500
Sales, January 1 to October 15, 2020 960,000
Using the gross profit method, what is the estimated cost of Sales returns and allowances 15,000
inventory on March 31? Purchases, January 1 to October 15, 2020 890,000
A. 1,120,000 Purchase returns and allowances 12,000
B. 1,125,000 Cost of stock in display room, not 85,000
C. 2,025,000 destroyed
D. 2,700,000
100. Uranus Company provided the following information for the How much is the estimated cost of merchandise lost in the
current year. fire of October 15, 2020?
 A. P120,250 A. 1,400,000
B. P148,600 B. 1,440,000
C. P167,500 C. 1,460,000
D. P252,500 D. 1,550,000

RETAIL INVENTORY METHOD BIOLOGICAL ASSETS

105. Rafaela Company used the average retail inventory
method. At year-end, the following information relating to Miya Company provided the following information about
the inventory was gathered: assets in a first plantation and farm business.
Cost Retail
Beginning inventory 190,000 450,000 Freestanding trees 5,000,000
Purchases 2,990,000 4,350,000 Land under trees 900,000
Purchase discounts 40,000 0 Roads in forest 500,000
Freight in 150,000 0 Animals related to recreational activities 2,000,000
Markups 300,000 Bearer plants 1,500,000
Markdowns 400,000 Bearer animals 1,000,000
Sales 4,400,000 Agricultural produce harvested 2,000,000
Agricultural produce growing on bearer plants 600,000
Sales return 100,000
Plants with dual use 1,500,000
Sales discount 50,000
Sales allowance 30,000
109. What total amount should be reported as biological
assets?
What is the estimated cost of the ending inventory?
A. 6,000,000
A. 245,000
B. 6,600,000
B. 280,000
C. 8,100,000
C. 315,000
D. 8,500,000
D. 400,000
110. What total amount should be reported as property,
106. Valentina Company used the conservative retail inventory
plant and equipment?
method and provided the following information relating to
A. 1,400,000
the inventory at year-end:
B. 2,500,000
Cost Retail
C. 3,400,000
Beginning inventory 530,000 900,000
D. 4,900,000
Purchases 6,080,000 8,700,000
111. What total amount should be reported as inventory?
Purchase discounts 85,000
A. 2,000,000
Freight in 105,000
B. 2,600,000
Markup 600,000
C. 3,000,000
Markdown 800,000
D. 4,000,000
Sales 8,600,000
Sales discounts 100,000
On January 1, Query Company has a herd of 10 2-year old
What is the ending inventory at year-end?
animals. One animal aged 2.5 years was purchased on
A. 258,000
July 1 for P108, and one animal was born on July 1.
B. 520,000
C. 585,000
No animals were sold or disposed of during the year. The
D. 800,000
active market price provided the following fair value less
107. Vale Company used the retail inventory method to estimate
cost of disposal:
Inventory for interim statement purposes.
2-year old animal on January 1 100
The entity provided the following information for the current
2.5-year old animal on July 1 108
year
New born animal July 1 70
Cost Retail
2-year old animal on December 31 105
Beginning Inventory 700,000 1,000,000
2.5-year old animal on December 111
Purchases 4,100,000 6,300,000
31
Markup 700,000
New born animal o December 31 72
Markdown 500,000
3-year old animal on December 31 120
Sales 5,900,000
0.5-year old animal on December 80
Normal shoplifting losses 100,000
31
Under the average cost approach, what is the estimated
cost of ending inventory?
112. What is the fair value of the biological assets on
A. 900,000
December 31?
B. 960,000
A. 1,320
C. 1,024,000
B. 1,360
D. 1,500,000
C. 1,400
108. Roger Company used the FIFO retail method of inventory
D. 1,440
valuation. The entity provided the following information for
113. What amount of gain from change in fair value of
the current year:
biological assets should be recognized in the current
Cost Retail Retail
year?
Beginning inventory 1,200,000 1,500,000
A. 222
Net purchases 4,200,000 5,900,000
B. 292
Net markup 200,000
C. 300
Net markdown 100,000
D. 332
Net sales 5,500,000
What is the estimated cost of ending inventory?
 114. What is the gain from change in fair value due to price
change?
A. 55
B. 222
C. 237
D. 292
115. What is the gain from change in fair value due to
physical change?
A. 55
B. 222
C. 237
D. 292

Lunox Company has different kinds of farm animals at the

beginning of current year.

During the current year, several acquisitions occurred

related to these farm animals.

Detailed summary of transactions

Carrying amount on January 1:

15 Horses (1 year old) 1,000,000
10 Dairy cattle (2 years old) 400,000
8 Carabaos (2.5 years old) 200,000
20 Hogs (3 years old) 500,000

Purchases on June 30:

4 Dairy cattle (1 year old) 150,000
6 Carabaos (6 months old) 100,000

Fair value less cost of disposal on

December 31:
15 Horses (1 year old) 1,200,000
10 Dairy Cattle (2 years old) 520,000
8 Carabaos (2.5 years old) 250,000
20 Hogs (3 years old) 550,000
4 Dairy cattle (1 year old) 170,000
6 Carabaos (6 months old) 110,000

Fair value less cost of disposal on

December 31:
15 Horses (2 years old) 1,350,000
10 Dairy Cattle (3 years old) 580,000
8 Carabaos (3.5 years old) 290,000
20 Hogs (4 years old) 600,000
4 Dairy cattle (1.5 year old) 200,000
6 Carabaos (1 year old) 140,000

There were no farm animals sold during the year and

neither were there any newborns nor deaths.

116. What is the carrying amount of the biological assets on

December 31?
A. 2,350,000
B. 2,380,000
C. 2,800,000
D. 3,160,000
117. What is the gain form from change in fair value attributable
to price change?
A. 360,000
B. 450,000
C. 700,000
D. 810,000
118. What is the gain from change in fair value attributable to
physical change?
A. 360,000
B. 450,000
C. 700,000
D. 810,000