IA – Assignment 3
Assignment Instructions
● Read each question carefully before answering.
● Write your answers neatly on one whole sheet of paper.
● Box your final answer for each question.
● Make sure your handwriting is clear and legible.
INVENTORY
PROBLEM 1
Colombia Company reported the December 31, 2024 inventory at P2,500,000. The entity
revealed the following transactions:
• Goods shipped to the entity FOB Destination on December 26, 2024 were received
on January 2, 2025. The invoice cost of P300,000 is included in the preliminary
inventory balance.
• At year-end, the entity held P250,000 of merchandise on consignment from
another entity. This merchandise is included in the preliminary inventory
balance.
• On December 29, 2024 merchandise costing P100,000 was shipped to a customer FOB
Shipping Point and arrived at the customer location on January 3, 2025. The
merchandise is not included in the preliminary inventory balance.
• At year-end, the entity had merchandise costing P150,000 out on consignment
with another entity. The merchandise is not included in the preliminary
inventory balance
What amount should be reported as inventory on December 31, 2024?
PROBLEM 2
Baritone Company counted and reported the ending inventory on December 31, 2024 at
P2,000,000.
None of the following items were included when the total amount of the ending
inventory was computed:
• Goods located in the entity’s warehouse that are on 150,000
consignment from another entity.
• Goods sold by the entity and shipped FOB Destination 200,000
were in transit on December 31, 2024 and received by the
customer on January 2, 2025.
• Goods purchased by the entity and shipped FOB Seller 300,000
were in transit on December 31, 2024 and received by the
entity on January 2, 2025.
• Goods sold by the entity and shipped FOB Shipping Point 400,000
were in transit on December 31, 2024 and received by the
customer on January 2, 2025.
What is the correct amount of inventory on December 31, 2024?
PROBLEM 3
The records of ABC Co. show the following:
• Inventory on display shelves, per physical count 100,000
• Inventory stocked in warehouse, per physical count 250,000
• Inventory sold under a bill and hold arrangement, 20,000
included in the stock of inventory in warehouse
• Inventory purchased in an installment sale, 30,000
physical possession is obtained but the seller
retains the legal title to the goods until full
payment of the purchase price, not included in the
physical count
• Inventory pledged as collateral security for a 60,000
bank loan, not included in the count
• Inventory purchased under a lay-away sale plan, 80,000
physical possession is not yet obtained until full
payment of the purchase price
• Inventory sold wherein ABC Co. is obligated to 10,000
repurchase the inventory at a future date, not
included in the physical count
Compute for the balance of inventory.
PROBLEM 4
The following information was available from the inventory records of the Brooks
Company for January 2002:
Units Unit Cost Total Cost
Balance at January 1, 2002 3,000 19.55 58,650
Purchases:
January 6, 2002 10,200 21.50 219,300
January 26, 2002 2,250 20.60 46,350
Sales:
January 7, 2002 2,700
January 31, 2002 7,200
Compute for the (1) ending inventory and (2) cost of goods sold under each of the
following cost flow formula:
a. FIFO Periodic
b. FIFO Perpetual
c. Weighted Average Cost Periodic
d. Weighted Average Cost Perpetual (Moving Average)
PROBLEM 5
The following data relate to the records of Powell Corp for the month of September:
Sales 160,000
Beginning Inventory 20,000
Purchases 180,000
Goods available for sale 200,000
Using these data, estimate the cost of ending inventory for each situation below:
a. Markup is 50% on cost
b. Markup is 60% on sales
c. Markup is 25% on cost
d. Markup is 40% on sales
PROBLEM 6
Janelle Company used the retail inventory method to approximate the ending inventory.
Cost Retail
Beginning Inventory 650,000 1,200,000
Purchases 9,000,000 14,700,000
Freight in 200,000
Purchase returns 300,000 500,000
Purchase allowances 150,000
Departmental Transfer in 200,000 300,000
Markup 400,000
Markup cancellation 100,000
Markdown 1,200,000
Markdown cancellation 200,000
Sales 9,500,000
Sales discounts 100,000
Employee discounts 500,000
Estimated normal 600,000
shoplifting loss
Estimated normal shrinkage 400,000
Determine the (1) ending inventory and (2) cost of goods sold for the following
methods:
a. Average Cost Method
b. FIFO Cost Method
c. Conservative Method