Professional Documents
Culture Documents
Page 1 of 20
Villaluz
6,000,00
0
(300,000
)
1,500,00
0
60,000
3,000
12,000
30,000
60,000
150,000
45,000
90,000
30,000
600,000
900,000
10,000
1,000,00
0
P 350,000
175,250
15,000
P 540,250
(246,750)
P 293,500
Page 2 of 20
Villaluz
Question(s):
12.What is the amount of outstanding checks as of November 30?
Problem 6: (Burma Co.)
The following information was revealed in trying to reconcile the bank statement balance as
of February 28 with the Burma Co.s records as of the same date:
Total credits per February bank statement were P 310,000.
Among the bank credits in January was a customers note collected by the bank for
the account of the company which the company recognized in February. Proceeds
were P 30,300.
Client books for February showed total debits of P 420,000.
Deposits in transit on January 31 were P 15,000.
The bank credited the clients account in February for P 50,000 representing loan
approved and granted by the bank. Burma made no entry for this.
A deposit of P 4,300 was recorded by your client as P 3,400 in June. The bank
recorded the deposit at its correct amount.
Question(s):
13.How much were the deposits in transit as of February 28?
Problem 7: (Cote Divoire Co.)
A count of the petty cash fund of Cote Divoire Co. on January 5, 2016, 9 am revealed the
following composition:
Bills and coins
Vouchers:
Dated December 2015
Dated January 2016
IOUs from employees (all dated December 2015)
7,30
0
850
200
4,20
0
2,80
0
4,25
0
5,00
0
Page 3 of 20
Villaluz
665,000
Per
bank
statement
780,000
2,500,000
2,520,000
(2,354,600)
(2,380,000
)
(8,500)
(610,000)
(36,000)
270,000
805,000
August 31 bank
reconciliation
Balance per bank
Deposits in transit
Outstanding checks
Balance per books
780,000
60,000
(175,000
)
665,000
Additional information:
(1) Checks clearing that were outstanding on August 31 totaled P 165,000.
(2) Checks clearing that were recorded in the June disbursements journal totaled P
2,050,000.
(3) A check for P 100,000 cleared the bank, but had not been recorded in the cash
disbursements journal. It was for a purchase of merchandise.
(4) A check for P 39,600 was charged to Cyprus but had been written on a different
companys bank account.
(5) Deposits included P 60,000 from August and P 2,440,000 for June.
(6) The bank charged Cyprus account for an NSF check totaling P 36,000. The credit
manager concluded that the customer intentionally closed its account and left the
city. The check was turned over to a collection agency.
(7) A note for P 595,000, plus interest, was paid directly to the bank under an agreement
signed three months ago. The note payable was recorded at P 595,000 on Cyprus
records.
Question(s):
16.What is the amount of deposits in transit as of September 30, 2016?
17.What is the amount of outstanding checks as of September 30, 2016?
18. What is the adjusted book disbursements on September 30?
19.What is the adjusted bank balance on September 30?
Problem 9: (Eritrea Corp.)
A count of the petty cash fund of Eritrea Corp. in the morning of January 6, 2016 showed the
following compositions:
Bills and coins:
Denomination
P 1,000
500
200
100
50
20
10
5
No. of pieces
5
10
5
10
10
20
25
50
Page 4 of 20
Villaluz
500
300
900
1,000
1,000
800
1,500
2,000
1,000
10,00
0
900
Question(s):
20.How much is the cash shortage or overage, if any?
21.What is the correct petty cash fund balance to be reported as of December
31, 2015?
Problem 10: (Kiribati Co.)
In the course of your examination of Cash of Kiribati Co. as of and for the period ended
December 31, 2015, the following is a list that comprise the companys Cash and cash
equivalent account:
Current account at PCIB
Savings account at DBP
Current account at Eastwest Bank
Undeposited checks, bank drafts, and money orders on hand
Travel fund
Interest and dividend fund
Payroll fund
Pension fund
Change fund
Bond sinking fund
Petty cash fund, imprest balance
Cash in HCI Bank (closed)
Postage stamps
IOU from employees
Credit memo from a vendor for a purchase return
Investment in debt securities, due 3/31/16 (acquired 12/31/15)
Investment in debt securities, due 2/28/16 (acquired 2/1/15)
Investment in equity securities
3,000,00
0
2,000,00
0
(240,000
)
987,000
50,000
120,000
400,000
250,000
25,000
500,000
30,000
300,000
3,000
30,000
60,000
600,000
9,000,00
0
1,000,00
0
Page 5 of 20
Villaluz
Page 6 of 20
Villaluz
106,000
1,250,000
25,000
60,000
5,000
5,000
50,000
5,000
1,000
50,000
10,000
(1,240,000
)
(7,000)
(5,500)
(3,000)
(2,000)
(45,000)
264,500
Additional information:
(a)
It was ascertained that 50% of the outstanding trade accounts receivable balance
are still currently collectible. The credit sales term is 5/30 n/60. Based on past
experience, 25% of the customers whose accounts are still current normally pay
within the discount period.
(b)
30% of the trade accounts receivable is 60 days past due and is expected to be
90% collectible.
(c)
20% of the trade accounts receivable is more than 120 days past due and is
expected to be 50% collectible.
Question(s):
1. What is the correct balance of the trade accounts receivable?
2. What is the carrying value of the trade accounts receivable?
The general ledgers of Costa Rica Corp. have the following balances:
Accounts receivable
Allowance for uncollectible
accounts
Net realizable value
(b)
360,000
(1,320)
358,68
0
Amount:
P
240,00
0
48,000
36,000
24,000
12,000
360,0
00
(c)
Investigations revealed that half of the over 180 days account is definitely
uncollectible and that a P 12,000 customer credit balance for an advance
payment for a future delivery was included in the under 30 days account.
(d)
0%
3%
15%
30%
60%
(e)
The credit sales term is 10/15 n/30. As per past experience, 20% of the customers
whose accounts are still current are expected to take advantage of the cash
discount.
(f)
Also you have ascertained that 5% of the current account should be provided for
probable future sales returns.
Page 7 of 20
Villaluz
Balance in
each category:
P
1,140,000
600,000
400,000
130,000
2,270,000
Estimated uncollectible
percentage (%):
1.5
8.0
35.0
70.0
Based on the review of the collectability of the account balances in the prior to 1/1/15
category, additional accounts totaling P 30,000 were written off as of December 31, 2015.
Effective with the year ended December 31, 2015, Georgia adopted the revised company
policy in recognizing bad debts.
Further review revealed that P 700,000 of the November December balance were
December sales and 30% of the amount is anticipated to be collected within the discount
period the following period.
Question(s):
7. What is the correct balance of the allowance for bad debts at December 31,
2015?
8. What is the carrying value of the accounts receivable at December 31,
2015?
Problem 4: (Marshall Islands Co.)
In the course of your examination of Marshall Islands Co.s receivables account as of
December 31, 2015, you found out that the account comprised the following items:
Trade accounts receivable
Trade accounts receivable, assigned (proceeds from assignment
amounted to P 650,000)
Trade accounts receivable, factored (proceeds from factoring done on
a without-recourse basis amounted to P 250,000)
12% trade notes receivable
20% trade notes receivable, discounted at 40% upon receipt of the
180-day note on a without recourse basis
Trade receivables rendered worthless and must be written off
Installments receivable, normally due one to two years
Customers accounts reporting credit balances arising from sales
returns
Advance payments for purchase of merchandise
Customers accounts reporting credit balances arising from advance
payments
Cash advances to affiliates
Page 8 of 20
Villaluz
1,550,000
750,000
300,000
200,000
300,000
50,000
600,000
60,000
300,000
40,000
800,000
30,000
600,000
20,000
500,000
2,000,000
Question(s):
9. How much is the total trade receivables?
10.How much is the amount to be presented as trade and other receivables
under current assets?
11.How much gain or loss from receivable financing should be recognized in
the profit or loss statement?
Problem 5: (San Marino, Inc.)
San Marino, Inc. had the following transactions for the fiscal year ended August 31, 2015:
(a) San Marino, Inc. had an outstanding accounts receivable balance amounting to P
4,000,000 on June 30, 2015. These was pledged to HCIB Bank in consideration of a
12% loan. The loan amount is 80% of the outstanding accounts receivable. HCIB
charged San Marino 5% of the outstanding accounts receivable as service charge. By
the end of July, San Marino collected P 1,200,000 cash from credit customers, net of P
120,000 cash discounts. Also, by the end of July, San Marino accepted merchandise
from customers as returns. This was originally invoiced at P 80,000. By the end of
August, San Marino collected another P 900,000 after P 50,000 cash discounts and
wrote-off P 200,000 of the accounts receivable as worthless.
It was agreed-upon with the HCIB that remittances from collections will be made to
the bank on a monthly-basis and that the collections from customer will cover both
interest and the principal amount of the loan.
(b) On May 1, 2015, San Marino discounted to HCIB a 12-month, 10% note dated January
1, 2015 and with a face value of P 2,000,000. HCIBs discount rate was at 8%. The
discounting was done on a without-recourse basis.
Question(s):
12.What is the balance of the accounts receivable account as of August 31,
2015?
13.What is the balance of the loan payable account as of August 31, 2015?
14.What is the balance of the note receivable as of August 31, 2015?
15.What amount of gain or loss is to be reported in the 2015 profit or loss from
derecognition of receivables, if any?
Problem 6: (Botswana Co.)
Botswana Co. had the following transactions in 2015:
(a) At the beginning of November, Botswana Co. assigned P 2,000,000 out of its P
10,000,000 outstanding accounts receivable to NYB Bank in consideration of a P
1,500,000, 12% loan. NYB charged Botswana 5% of the loan principal as service
charge. By the end of November, Botswana collected P 600,000 cash from the
assigned accounts net of P 50,000 cash discount. Also, by the end of November,
Botswana accepted merchandise from customers as returns. This was originally
invoiced at P 60,000. By the end of December, Botswana collected another P 700,000
from the assigned accounts after P 40,000 cash discount and wrote-off P 80,000 of
the assigned accounts as worthless.
The agreement with NYB calls for monthly remittance of customer collections for the
month. The collections will cover both interest and loan principal.
(b) Also at the beginning of November, Botswana Co. factored P 500,000 of its accounts
receivable to NYB. As of the date of factoring, it was ascertained that P 20,000 of the
accounts receivable is doubtful of collection. NYB advanced P 350,000 cash to
Botswana and withheld P 50,000 as factors holdback to cover future sales discount
and sales returns and allowances. The Co. incurred P 10,000 of legal fees and other
professional fees related to the factoring.
Page 9 of 20
Villaluz
4,500,00
0
1,200,00
0
In connection with your examination, you were able to gather the following transactions
during 2016 and other information pertaining to the companys long-term receivables: (Use
three decimal place for PV factors)
(1) The note receivable from sale of a business segment bears annual interest rate of
12%. The note is payable in annual installments of P 1,500,000 plus appropriate
interest every April 1. The initial principal and interest payment was made on April 1,
2016.
(2) The note receivable from vice president is dated December 31, 2015, earns interest
at 10%, and is due on December 31, 2018. The 2016 interest was collected at yearend.
(3) The company sold a piece of equipment to Bhutan Corp. on April 1, 2016 in exchange
for a P 600,000 non-interest bearing note due on April 1, 2018. The note had no
ready market and there was no established price for the said equipment. The
prevailing interest rate for a note of this type at April 1, 2016 was 12% and 15% at
December 31, 2016.
(4) A tract of land was sold by the company to Bobby Bolivia Inc. on July 1, 2016 for P
3,000,000 under an installment sales contract. Bobby signed a four-year 11% note for
P 2,100,000 on July 1, 2016, in addition to the P 900,000 down-payment. The equal
annual payments of principal and interest on the note will be P 676,875 payable on
July 1 of every year starting July 1, 2017. The land had an established cash price of P
3,000,000 and its cost to the company was P 2,250,000. The collection of the
installments on this note is reasonably assured.
Question(s):
19.How much is the total current portion of the long-term notes receivable as
of December 31, 2016?
20.How much is the total non-current notes receivables as of December 31,
2016?
21.What is the amount of accrued interest receivable as of December 31,
2016?
22.What is the total amount of interest income to be reported for the year
2016?
Problem 8: (Kosovo Co.)
On December 31, 2015, Kosovo Co. lent P 4,000,000 to Latvia Inc. due after three years.
Kosovo received an 8% promissory note. Interests are collectible annually every December
31. The prevailing market rate of a note of this type is 6.25%.
Kosovo was able to collect interest as it became due at the end of 2016. During 2017, Latvia
is experiencing business deterioration due to political instability and faltering global
economy, Kosovo was not able to collect amounts due at the end of 2017. After assessing
the collectability of the note at December 31, 2017, Kosovo determined that it was probable
that Latvia would pay back only P 3,400,000 collectible as follows:
December 31, 2019
Page 10 of 20
Villaluz
1,400,00
0
1,000,00
0
600,000
400,000
As of December 31, 2017, the prevailing interest rate for all debt instruments is 9.75%. (Use
four decimal places for PV factors)
Question(s):
23.What is the carrying value of the notes receivable as of December 31,
2016?
24.What is the impairment loss to be recognized in the 2017 income
statement?
25.What amount related to the note shall be presented as non-current assets
on December 31, 2018?
26.What is the interest income to be recognized in the 2019 income
statement?
27.What amount related to the note shall be presented as current assets on
December 31, 2020?
28.What is the carrying value of the notes receivable as of December 31,
2020?
Problem 9: (Mauritania Corp.)
You are to assess the collectability of the receivables carried in the books of Mauritania Corp.
the books showed the following balances as of December 31, 2015:
Notes receivable
Accounts
receivable
6,000,000
4,000,000
2,000,000
3,000,000
1,000,000
(2) No interest has yet been recorded by Mauritania during 2015 on any of the notes.
(3) Nauru Co. is undergoing bankruptcy proceedings and has negotiated for a
restructuring of its notes receivable. The note was for a four-year period and interest
of 10% is collectible annually. All interest accrued before 2015 has been collected.
The note matured on December 31, 2015. Collection of interest was last made on
December 31, 2014. The restructuring agreement with Nauru calls for annual
payment of P 550,000 starting December 31, 2016. No further interest will be
collected during the extended period.
(4) The notes receivable from Rwanda bears interest at 10%. The note was received from
sale of goods in the normal course of business. The note is dated October 1, 2015
and matures on March 31, 2017.
(5) The notes receivable from Poland is a three-year non-interest bearing note. The note
was received in exchange for a tract of land sold by Mauritania on May 1, 2015. The
land was carried in the books at the date of sale at P 2,600,000. The prevailing rate
of interest for a note of this type is 10%.
Question(s):
29.What amount is to be presented as current assets in the statement of
financial position at December 31, 2015?
30.What amount is to be presented as non-current assets in the statement of
financial position at December 31, 2015?
31.What is the amount of impairment loss on receivables to be reported in the
2015 income statement?
32.How much is the total interest revenue for the year 2015?
Page 11 of 20
Villaluz
1,900,000
350,000
32,000
3,504,750
15,000
Question(s):
33.What is the account balance of Accounts receivable at December 31, 2015?
-END OF RECEIVABLESINVENTORIES
Problem 1: (Belize Co.)
The following information were found during your examination of the inventory and related
accounts of the Belize Co.:
(a) An excerpt from Belizes trial balance revealed the following account balances:
Accounts
receivable
Inventory, per
count
Accounts payable
Net sales
Net purchases
Net income
680,000
1,200,0
00
790,000
6,050,0
00
3,300,0
00
610,000
(b) Belize conducted an inventory count on December 31, 2015. Belize normally sells at
30% gross margin based on sales price.
(c) Goods were in transit FOB destination from a supplier in the amount of P 120,000.
Further testing revealed that the suppliers invoice pertaining to the delivery was
received and recorded on December 29, 2015.
(d) Goods costing P 70,000 had been received on December 31, and recorded as a
purchase. However, upon your inspection the goods were found to be defective and
would be immediately returned.
(e) Materials costing P 224,000, sold and billed on December 30 under a bill-and-hold
agreement, had been segregated in the warehouse awaiting pick-up by the customer.
Being on hand, the materials had been included in the count.
(f) Goods costing P 70,000 was out on consignment with Cambodia Co. since the
monthly statement from Cambodia listed those materials as on hand, the items had
been excluded from the ending inventory and invoiced on December 31 at a normal
gross profit provision.
(g) The sale of materials invoiced at P 150,000 had been shipped FOB point of shipment
at December 31. However, this inventory was found to be included in the ending
inventory. The sale was properly recorded in 2015.
(h) Goods costing P 98,000 had been segregated but not shipped at December 31. A
review of the customers purchase order related to the goods set forth terms as FOB
shipping point. The sale had not been recorded while the goods were excluded from
the count.
(i) Belize has an invoice from a supplier, terms FOB shipping point but the goods had not
arrived as yet. While these materials costing P 170,000 had been included in the
inventory count, no entry had been made for their purchase.
(j) Merchandise costing P 200,000 had been recorded as a purchase but not included as
inventory. Terms of the sale are FOB point of shipment according to the suppliers
invoice which had arrived at December 31.
Determine the correct balances of the following:
Page 12 of 20
Villaluz
Inventory.
Accounts payable.
Net sales.
Net purchases.
Net income.
Goods costing P 100,000 are on consignment with a customer. These goods were
invoiced at normal profit margin which was at 40% based on cost and was recorded
as 2015 sales. Being offsite on the count date which was on December 30, 2015,
these goods were not included in the physical count.
Goods costing P 33,000 were delivered to Comoros Corp. on January 3, 2016. The
invoice of these goods were received and recorded on January 8, 2016. The invoice
showed that the shipment was made on December 30, 2015, FOB seller.
Goods costing P 40,000 were shipped FOB seller on December 31, 2015, and were
received by the customer on January 1, 2016. Although the sale was recorded in
2015, these goods were included in the 2015 inventory.
Goods costing P 16,000 were shipped to a customer on December 30, 2015, FOB
buyer. These goods were received by the customer on January 7, 2016 and were not
included in the physical count. The sale was recorded in 2016.
Goods costing P 22,000 shipped by a vendor under FOB buyer term, were received on
January 2, 2016. The related invoice however, were received on December 31, 2015,
thus was recorded as purchase in 2015.
Goods costing P 50,000 were received from a vendor under consignment term. These
goods were included in the physical count. No purchase related to the inventory had
been recorded yet.
Comoros recorded as 2015 sale a P 112,000 invoice for goods delivered to a
customer on December 31, 2015, FOB buyer. The goods were received by the
customer on January 6, 2016. Having been delivered after the inventory count date,
the goods were included in the physical count.
Question(s):
6. What is the net adjustment to inventories as of December 31, 2015?
7. Assuming sales are on account, what is the net adjustment to accounts
receivable as of December 31, 2015?
8. Assuming all purchases are on account, what is the net adjustment to
accounts payable?
9. What is the effect of the errors to the 2015 net income?
235,000
2,543,9
00
2,778,9
00
(?)
?
The following list of invoices is for purchases of merchandise and are entered in the
purchase journal for the months of October and November 2015:
Page 13 of 20
Villaluz
Amoun
t:
Freight
terms:
Invoice
date:
14,400
8,800
18,500
Destination
Destination
Shipping
point
Destination
Destination
October 18
October 20
October 23
6904
6905
7,800
5,000
6906
20,500
6907
18,400
6908
6909
24,200
69,200
Shipping
point
Shipping
point
Destination
Destination
Date
merchandise
were received:
October 20
October 23
October 30
October 21
November
5
October 26
November 3
October 28
October 26
October 30
October 22
October 28
October 30
October 30
Date
merchandise
were received:
October 31
October 30
October 30
October 30
Amoun
t:
Freight
terms:
Invoice
date:
4,000
9,700
12,840
Destination
Destination
Shipping
point
Shipping
point
Shipping
point
Shipping
point
Destination
October 30
October 30
October 26
6915
14,440
6916
25,640
6917
28,400
6918
14,200
November
1
October 24
November 3
October 24
November 4
October 28
November 4
November 4
Question(s):
10.What is the adjusted balance of the Inventory account as of October 31,
2015?
11.What is the correct cost of goods sold for the period ended October 31,
2015?
Problem 4: (Holy See Co.)
As part of your examination of receivables of Holy See Co., you performed a cut-off test of
sales. Results of your test revealed the following:
Recorded as Sales in December 2015
Sales
price
:
18,00
0
12,50
0
8,680
14,20
0
9,000
10,00
0
7,800
14,00
0
Cost:
Freight Terms:
Date of
shipment:
Date received by
the customers:
16,50
0
10,20
0
7,240
12,50
0
7,500
7,750
Shipping point
12/25/2015
12/30/2015
Destination
12/25/2015
12/30/2015
Destination
Shipped to
consignee
Shipping point
Destination
12/27/2015
12/29/2015
01/03/2016
01/03/2016
12/30/2015
12/31/2015
01/03/2016
01/02/2016
6,100
12,00
0
Shipping point
Shipped to
consignee
12/31/2015
12/31/2015
01/03/2016
01/02/2016
Page 14 of 20
Villaluz
Sales
price
:
21,00
0
10,50
0
4,500
6,500
Cost:
Freight Terms:
Date of
shipment:
Date received by
the customers:
18,20
0
8,800
Shipping point
12/31/2015
01/02/2016
Destination
12/31/2015
01/02/2016
3,200
5,000
Destination
Shipping point
01/01/2016
01/03/2016
01/04/2016
01/07/2016
A count of all inventories within the premises was made in the morning of December 31,
2015 prior to any shipment made during that day. The total cost of the count was recorded
as inventories as of December 31, 2015. The goods shipped to consignees are still unsold at
December31.
The unadjusted ledger balances showed the following:
Accounts
receivable
Inventories
Sales
276,500
425,000
1,320,0
00
842,000
87,500
95,000
840,00
0
960,00
0
675,00
0
800,00
0
Page 15 of 20
Villaluz
7,500
1,000
1,500
2,000
5,500
10,00
0
Required:
17.Compute the gross profit ratio for the eleven months ended May 31, 2015.
18.Compute the cost of goods sold during June 2015.
19.Compute the estimated June 30, 2015 inventory.
Problem 6: (Malawi Co.)
Malawi Co.s policy is to measure their inventory accounts at the lower of cost and net
realizable value (NRV). Data regarding Malawis inventories are as follows:
The general ledgers showed the following balances:
Costs:
Raw materials
Work-inprogress
Finished goods
2,875,00
0
748,000
1,430,00
0
Raw materials
Finished goods
(40,000)
(10,000)
RM #0823
250,000
250,000
500,000
480,000
RM #0800
RM #0913
400,000
450,000
300,000
275,000
Item # 18673
Cost
Current purchase
price
RM #0997
Item # 18674
Cost
Current purchase
price
RM #0762
P
RM
#0916
400,000
375,000
RM
#0888
200,000
180,000
RM
#0797
450,000
420,000
375,000
395,000
WORK-IN-PROGRESS INVENTORY
Cost
Selling price
Estimated cost to
complete
Replacement cost
Normal profit margin as
percentage of selling
price
Item
#18672
240,000
360,000
48,000
Item
#18673
188,000
289,000
97,650
Item
#18674
320,000
735,000
74,000
208,000
169,000
375,000
30.0
25.0
20.0
Item
#18672
Item
#18673
Page 16 of 20
Villaluz
Item #18674
550,000
675,000
540,000
620,000
20.0
15.0
430,000
820,000
15.0
Question(s):
20.What is the correct amount to be reported as Raw materials inventory as of
year-end?
21.What is the correct amount to be reported as Work-in-Progress inventory as
of year-end?
22.What is the correct amount to be reported as Finished goods inventory as
of year-end?
23.What is the total loss on inventory write-down to be reported for the
period?
Problem 7: (Antigua and Barbuda Corp.)
Antigua and Barbuda Corp. wholesales wooden tables. The company is a calendar year
entity. At December 1, 2015, inventory on hand consisted of 350 wooden tables at P 820
each and 43 wooden tables at P 850 each. During the month ended December 31, 2015, the
following inventory transactions took place. All purchase and sales transactions are on
credit.
Decemb
er
Five wooden tables were returned by a customer. They had originally cost P
820 each and were sold for a sales price same as the above.
Purchased 55 wooden tables at P 910 each.
1
1
1
5
1
6
1
8
2
0
2
4
3
0
Assuming Antigua and Barbuda uses perpetual inventory system, determine the
following:
24.Cost of 12/31/15 inventory using the First In, First Out (FIFO) method.
25.Gross profit for the month of December using the First In, First Out (FIFO)
method.***
26.Cost of 12/31/15 inventory using the moving average method.
27.Gross profit for the month of December using the moving average method.
***
Assuming Antigua and Barbuda uses periodic inventory system, determine the
following:
28.Cost of 12/31/15 inventory using the weighted average method.
29.Cost of goods sold for the month of December using the weighted average
method.
Problem 8: (Chad Co.)
The records of Chad Co. revealed the following information on August 31, 2015
Inventory, September 1
Purchases
Page 17 of 20
Villaluz
COST:
1,020,00
0
13,072,5
00
RETAIL:
1,920,000
22,155,00
0
300,000
Purchase return
Purchase allowance
Sales returns & allowances
Sales discounts
Purchase discounts
Normal spoilages &
breakages
Discounts granted to
employees
Departmental transfer debit
Departmental transfer credit
Net mark-up
Net mark-down
Mark-up cancellations
Mark-down cancellations
Abnormal spoilages &
breakages
450,000
270,000
19,800,00
0
750,000
450,000
500,000
15,960
600,000
300,000
300,000
600,000
120,000
425,000
1,200,000
450,000
1,425,000
40,000
40,000
200,000
Historical cost
Marker
s
24,000
Selling price
36,000
3,000
20,800
15.0
5.0
Pens
P
18,88
0
21,80
0
2,620
16,80
0
20.0
10.0
Pencil
s
30,000
38,000
6,200
16,800
25.0
10.0
Question(s):
33.What is the loss on inventory write-down under the direct write-off method?
34.What is the loss on inventory write-down under the allowance method,
assuming that the unadjusted balance of the allowance for inventory writedown is at P 2,000?
35.What is the gain on recovery of previous write-down under the allowance
method, assuming, that the unadjusted balance of the allowance for
inventory write-down is at P 5,000?
36.What is the correct carrying value of inventories as of December 31?
Problem 10: (Grenada Co.)
The following data was presented to you by Grenada Co. on December 31, 2015:
Item #:
012
013
014
015
Page 18 of 20
Villaluz
Quantity:
360 units
24 units
28 units
43 units
Cost:
3.60 each
4.70 each
16.50 each
5.15 each
Amount:
1,310.40
112.80
1,353.00
176.80
400 units
70 dozens
95 grosses
9.10 each
2.00/dozen
144.00/gross
8.10 each
2.00/dozen
132.00/gross
3,640.00
140.00
13,780.00
Question(s):
37.How much should the inventory be presented in the 2015 statement of
financial position?
-END OF INVENTORIES~END OF HANDOUT~
Every expert was once a beginner
Page 19 of 20
Villaluz
Suggested Answers:
RECEIVABLES
INVENTORIES
1. P 124,500
2. P 107,537
3. P 366,000
4. P 22,320
5. P 330,720
6. P 25,320
7. P 275,100
8. P 1,960,700
9. P 3,100,000
10. P 4,050,000
11. P (86,000)
12. P 1,450,000
13. P 1,152,320
14. 0
15. P 16,000 gain
16. P 470,000
17. P 245,850
18. P 90,000 loss
19. P 1,945,875
20. P 4,875,363
21. P 385,500
22. P 683,538
23. P 4,127,863
24. P 1,545,814
1. P 1,169,000
2. P 770,000
3. P 5,950,000
4. P 3,280,000
5. P 499,000
6. P 59,000
7. P (252,000)
8. P 11,000
9. P (204,000)
10. P 412,540
11. P 2,439,140
12. P 250,620
13. P 420,440
14. P 1,294,120
15. P 846,560
16. P 447,560
17. 20%
18. P 98,000
19. P 114,000
20. P 2,785,000
21. P 708,000
22. P 1,497,000
23. P 103,000
24. P 148,980
Page 20 of 20
Villaluz
447,000
18,500
613,500
900,000
6,655,500
25. P
26. P
27. P
28. P
29. P
30. P
31. P
32. P
33. P
1,806,139
188,596
542,561
919,023
1,400,655
3,771,950
456,555
375,260
353,250
25. P
26. P
27. P
28. P
29. P
30. P
31. P
32. P
33. P
34. P
35. P
36. P
37. P
176,230
143,486
170,736
133,607
382,603
297,500
308,750
252,500
3,880
1,880
1,120
69,000
18,012