Exercises/Activity: INVENTORIES

1. A company provided the following data:

Items counted in the bodega 4,000,000

Items included in the count specifically segregated for sale contract 100,000
Items in receiving department, returned by customer, in good condition 50,000
Items ordered and in the receiving department 400,000
Items ordered; invoice received but goods not received. Freight in on account of seller 300,000
Items shipped today, invoice mailed, FOB shipping point 250,000
Items shipped today, invoice mailed, FOB destination 150,000
Items currently being used for window display 200,000
Items on counter for sale 800,000
Items in receiving department, refused because of damage 180,000
Items included in count, damaged and unsalable 50,000
Items in the shipping department 250,000

What amount should be reported as inventory?

a. 5,700,000 c. 5,800,000
b. 6,000,000 d. 5,150,000

2. B company included the following items in inventory:

Materials 1,400,000
Advance for materials ordered 200,000
Goods in process 650,000
Unexpired insurance on inventory 60,000
Advertising catalogs and shipping cartons 150,000
Finished goods in factory 2,000,000
Finished goods in entity-owned retail store, including 50% profit on cost 750,000
Finished goods in hands of consignees, including 40% profit on sales 400,000
Finished goods in transit to customers, shipped FOB destination at cost 250,000
Finished goods out on approval, at cost 100,000
Unsalable finished goods, at cost 50,000
Office supplies 40,000
Materials in transit, shipped FOB shipping point, excluding freight of P30,000 330,000
Goods held on consignment, at sales price, cost P150,000 200,000

What amount should be reported as inventory?

a. 5,375,000 c. 5,540,000
b. 5,500,000 d. 5,250,000

3. C company provided the following information at the end of current year:

Finished goods in storeroom, at cost, including overhead of P400,000 or 20% 2,000,000

Finished goods in transit, including freight charge of P20,000, FOB shipping point 250,000
Finished goods held by salesmen, at selling price, cost P100,000 140,000
Goods in process, at cost of materials and direct labor 720,000
Materials 1,000,000
Materials in transit, FOB destination 50,000
Defective materials returned to suppliers 100,000
Shipping supplies 20,000
Gasoline and oil for testing finished goods 110,000
Machine lubricants 60,000

What amount should be reported as inventory?

a. 4,000,000 c. 4,270,000
b. 4,170,000 d. 4,090,000

4. F company provided the following for the current year:

Central warehouse Held by consignees
Beginning inventory 1,100,000 120,000
Purchases 4,800,000 600,000
Freight in 100,000
Transportation to consignees 50,000
Freight out 300,000 80,000
Ending inventory 1,450,000 200,000

What is the cost of goods sold for the current year?

a. 4,550,000 c. 5,070,000
b. 4,850,000 d. 5,120,000

5. H company revealed inventory on December 31, 2024 at P3,250,000 based on a physical count priced at cost and before
any necessary adjustment for the following:
  Merchandise costing P300,000 shipped FOB shipping point from a vendor on December 31, 2024 was received on
January 5, 2025.
 Merchandise costing P220,000 shipped FOB destination from a vendor on December 28, 2024 was received on
January 3, 2025.
 Merchandise costing P380,000 shipped to a customer FOB destination on December 28, 2024 arrive at the customer
location on January 6, 2025.
 Merchandise costing P120,000 was being held on consignment by I company, a consignee of H company.

What amount should be reported as inventory on December 31, 2024?

a. 3,670,000 c. 4,050,000
b. 3,930,000 d. 3,050,000

6. J 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.
 On December 31, 2024, 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 in not included in the preliminary inventory balance,
 On December 31, 2024, the entity had merchandise costing P150,000 out on consignment with the other entity. The
merchandise is not included in the preliminary inventory balance.

What amount should be reported as inventory on December 31, 2024?

a. 2,100,000 c. 2,400,000
b. 2,200,000 d. 2,500,000

7. K company had 150,000 units of product A on hand at January 1, 2025 costing P21 each.
Purchases of product A during the month of January were:

Units Unit cost

January 10 200,000 22
January 18 250,000 23
January 28 100,000 24

A physical count on January 31 shows 250,000 units of product A

What is the cost of the inventory on January 31 under the FIFO method?
a. 5,850,000 c. 5,350,000
b. 5,550,000 d. 5,250,000

8. L company used the perpetual system.

Units Unit cost Total cost
January 1 beginning balance 8,000 70.00 560,000
January 6 purchase 3,000 70.50 211,500
February 5 sale 10,000
March 5 purchase 11,000 73.50 808,500
March 8 purchase return 800 73.50 58,500
April 10 sale 7,000
April 30 sale return 300

If the FIFO cost flow method is used, what is the cost of the inventory?
a. 330,750 c. 433,876
b. 315,000 d. 329,360

9. M company is a wholesale of office supplies. The FIFO periodic inventory is used.

The entity reported the following activity for inventory of calculators during the month of March:
Units Cost
March 1 inventory 20,000 36.00
March 7 purchase 30,000 37.20
March 12 sale 36,000
March 21 purchase 48,000 38.00
March 22 sale 38,000
March 29 purchase 16,000 38.60

What is the ending inventory on March 31?

a. 1,500,800 c. 1,522,880
b. 1,501,600 d. 1,529,600
10. N company accumulated the following data for the current year:

Raw materials – beginning 90,000 units @P7.00

Purchases 75,000 units @P8.00
Purchases 120,000 units @8.50

The entity transferred 195,000 units of raw materials to work in process during the year.

Work in process – beginning inventory 50,000 units @P14.00

Direct labor 3,100,000
Manufacturing overhead 2,950,000
Work in process – ending inventory 48,000 units @P15.00

The entity used the FIFO method for valuing inventory.

What amount should be reported as cost of raw materials used?

a. 1,485,000 c. 1,530,000
b. 2,250,000 d. 3,015,000

What amount should be reported as total manufacturing cost?

a. 8,300,000 c. 7,580,000
b. 7,535,000 d. 9,065,000

What amount should be reported as cost of goods manufactured?

a.7,535,000 c. 7,515,000
b. 8,235,000 d. 8,280,000

11. During the month of January, O company which used a perpetual inventory system recorded the following information
pertaining to inventory:

Units Unit cost Total cost Units on hand

Balance on 1/1 10,000 100 1,000,000 10,000
Purchased on 1/7 6,000 300 1,800,000 16,000
Sold on 1/20 9,000 7,000
Purchased 1/25 4,000 500 2,000,000 11,000

Under the moving average method, what amount should O company report as inventory on January 31?
a. 2,640,000 c. 3,300,000
b. 3,225,000 d. 3,900,000

12. P company recorded the following data pertaining to raw material during the month of January:

Date received cost issued on hand

1/1 inventory 200 8,000
1/8 issue 4,000 4,000
1/20 purchase 12,000 240 16,000

What is the moving average unit cost of the inventory on January 31?
a. 220 c. 230
b. 224 d. 240

13. Q company used the moving average method to determine the cost of the inventory.

During the month of January, the entity recorded the following information pertaining to inventory:

Units Unit cost Total cost

Balance on January 1 40,000 50 2,000,000
Sold on January 17 35,000
Purchased on January 28 20,000 80 1,600,000

What amount of inventory should be reported on January 31?

a. 2,000,000 c. 1,625,000
b. 1,850,000 d. 1,500,000

14. R company reported during the current year:

Beginning inventory 500,000

Net purchases 2,500,000
Net sales 3,200,000

A physical count at year-end resulted in an inventory of P575,000. The gross profit had remained constant at 25%. The
entity suspected that some inventory may have taken by a new employee.

What amount should be reported as estimated cost of missing inventory at year-end?

a. 100,000 c. 225,000
b. 175,000 d. 25,000
15. S company reported the following information for the current year:

Beginning inventory 5,000,000

Purchases 26,000,000
Freight in 2,000,000
Purchase returns and allowances 3,500,000
Purchase discounts 1,500,000
Sales 40,000,000
Sales returns 3,000,000
Sales allowances 500,000
Sales discounts 1,000,000

A physical inventory taken at year-end resulted in an ending inventory of P4,000,000.

At year-end, unsold goods out on consignment with selling price of P1,000,000 are in the hands of a consignee.

The gross profit was 40% on sales.

What amount should be reported as cost of goods available for sale?

a. 28,000,000 c. 33,000,000
b. 31,000,000 d. 29,500,00

What amount should be reported as cost of goods sold?

a. 21,900,000 c. 21,300,000
b. 22,200,000 d. 24,000,000

What amount should be reported as cost of inventory shortage?

a. 1,800,000 c. 1,200,000
b. 2,700,000 d. 2,100,000