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Financial Accounting and Reporting Assignment: Inventory Estimation Gregorio, Wynona Jean C. BACC1A
1. (^) On June 15 of the current year, a fire destroyed the entire uninsured inventory of an SM retail store. The following data from January 1 to June 15 are available:
Merchandise Inventory, January 1 50, Purchases 240, Freight In 20, Purchase Return 10, Purchase Allowances 8, Purchase Discount 2,000 Note: In computing "net sales" , the sales allowances and sales discounts are disregarded- they are ignored and not deducted from sales.
Gross Profit (GP) Rate 20%
Sales 305,
Yung may Physical impact kang yung icoconsider which is Sales Return kaya di kasama yung Sales Allowances and Sales Discounts
Sales Return 5, Sales Allowances 4, Sales Discount 2,
Q1. What is the amount of estimated inventory loss assuming the GP rate is based on sale? a. P45, b. P50, c. P40, d. P35,
Q2. What is the amount of estimated inventory loss assuming the GP rate is based on cost? a. P45, b. P50, c. P40, d. P35,
2. On November 1, 2016, a fire destroyed the work in process inventories of Kenshin Inc. After the fire a physical inventory was taken.
November 1, 2016 January 1, 2016 Direct Raw Materials 400,000 600, Factory Supplies 80,000 50, Work in Process ?? 300, Finished Goods 500,000 900,
For the 10 months ended October 31, 2016, Kenshin reported the following:
Sales 10,000,000 Direct Labor 4,000, Accounts Payable, Jan.1 40,000 Manufacturing Overhead 40% of DL Accounts Payable, Oct. 31 80,000 Gross Profit Rate 35% Payment for Purchases 500,
Q. The amount of work in process inventory that was destroyed by fire amounted to a. P510, b. P140, c. P460, d. P540,
3. On December 31, 2016, a huge fire destroyed most of the inventories of Millennium Corporation. Accounting records on December 31 showed the following data:
Sales 5,000, Beginning Inventory 500, Purchases 4,960, Carriages Inward 100, Purchase Return, Allowance and Discount 80, Foods out on consignment (at selling price) 400, Gross Margin Rate based on cost 25% Additional Information:
- Included in the purchases was merchandise in transit as of December 31 purchased from a vendor under FOB Shipping point, P50,000.
Q3. If the ending inventory is to be valued at average cost approach, what is the ending inventory at cost?
5. Elemental Corporation had the following amounts at year-end:
Q. What is the estimated cost of the ending inventory at year-end? a. P100, b. P57, c. P62,500 ---- d. P66,
Direct Raw Materials-Jan. 1 600, Add: Purchases Accounts Payable-Dec. 31 80,000 Prime Cost =DM+DL Accounts Payable-Jan. 1 (40,000) Conversion Cost = DL + FOH Payment for Purchases 500,000 540, Total 1,140, Less: Direct Raw Materials-Nov. 1 (400,000) Direct Raw Materials used 740, Direct Labor 4,000, Manufacturing Overhead (4M x 40%) 1,600, Total Manufacturing Cost 6,340, Work in Process-Jan. 1 300, Total Work in Process/Total Goods put into process 6,640, Less: Work in Process- Nov.1 (squeeze) (540,000) Cost of Goods Manufactured - 6,100,000- Add: Finished Goods-Jan.1 900, Goods Available for Sale - 7,000,000- Cost of Sales: Less: Finished Goods- Nov.1 (500,000) Net Sales Cost of Sales - 6,500,000- Diviided by: Cost ratio Cost of Sales:
Prob# Beginning Inventory 500, Add: Net Purchases Purchases 4,960, Carriages Inward 100, Less: Purchase Return, Allowance and Discount (80,000) 4,980, Goods Available for Sale 5,480, Less: Cost of Goods Sold Sales 5,000, Divided by: Sales Ratio 125% - 4,000,000- Ending Inventory - 1,480,000- Less: Ending Inventory not destroyed by Fire 240,
Merchandise in Transit (FOB shipping Point) 50, Unsalable Merchandise that can be jobber 10, Goods on Consignment 320,000 620, Inventory Loss 860,
Prob# Cost Retail Beginning inventory 2,700,000 3,000, Purchases 6,000,000 8,950, Add; Freight In 480, Less:Purchases Return and Allowances (120,000) (200,000) Less:Purchase Discount (60,000) Add:Mark-Up 1,150, Less:Mark-Up Cancellation (400,000) Goods Available for Sale-conservative 9,000,000 12,500, Less:Mark-Down (950,000) Add;Mark-Down Cancellation 450, Goods Available for Sale Average 9,000,000 12,000, Sales (10,100,000) Sales Return and Allowances 250, Ending Inventory at retail Q1 2,150,
Q2 Conservative or Conventional Approach Cost Ratio: Conservative or Conventional= 9,000,000^ 72% 12,500, Ending Inventory at retail 2,150, Multiply by: Cost Ratio 72% Ending Inventory at Cost -^ 1,548,000-
- b. P1,548,
- c. P1,612,
- d. P1,505,
- a. P2,150,
- b. P1,548,
- c. P1,612,
- d. P1,505,
- a. P2,150, Q4. If the ending inventory is to be valued at FIFO approach, what is the ending inventory at cost?
- b. P1,548,
- c. P1,612,
- d. P1,505,
- a. P1,935, Q5. If the ending inventory is to be valued at LIFO approach, what is the ending inventory at cost?
- b. P2,700,
- c. P2,150,
- d. P1,505,
- Beginning Inventory 100,000 220, Cost Retail
- Net Purchases 410,000 6,000,
- Sales 700,
- Sales Return 20,
- Employee Discounts 5,
- Normal Shortage, Shrinkage, Spoilage and Breakage 8,
- Abnormal Shortage and Breakage 10,000 20,
- Normal Shoplifting Losses is 1% of sales 7,
- Ending Inventory at retail 100,
