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Problem 10-6

Items counted in the bodega 4,000,000.00


Items included in count specifically segregated per sales contract (100,000.00)
Items returned by customer 50,000.00
Items ordered and in receiving department 400,000.00
Items shipped today, FOB destination 150,000.00
Items for display 200,000.00
Items on counter for sale 800,000.00
Damaged and unsalable items included in count (50,000.00)
Items in shipping department 250,000.00
5,700,000.00
Problem 10-7

Materials 1,400,000.00
Goods in process 650,000.00
Finished goods in factory 2,000,000.00
Finished goods in company-owned retail store (750,000/150%) 500,000.00
Finished goods in the hands of consignees (400,000 x 60%) 240,000.00
Finished goods in transit 250,000.00
Finished goods out on approval 100,000.00
Materials in transit (330,000 + 30,000) 360,000.00
Correct inventory 5,500,000.00
Problem 10-8

Finished goods 2,000,000.00


Finished goods held by salesman 100,000.00
Goods in process (720,000/80%) 900,000.00
Materials 1,000,000.00
Materials returned to suppliers for replacement 100,000.00
Factory supplies (110,000 + 60,000) 170,000.00
Correct inventory 4,270,000.00
Problem 10-9

1. Inventory 50,000.00
Income summary 50,000.00

2. Accounts payable 75,000.00


Purchases 75,000.00

3. Purchases 30,000.00
Accounts payable 30,000.00

Inventory 30,000.00
Income summary 30,000.00

4. Income summary 90,000.00


Inventory 90,000.00

5. Purchases 140,000.00
Accounts payable 140,000.00
Problem 10-10

1. EXCLUDE - The term of the shipment is FOB destination


2. EXCLUDE - The goods are held only for consignment
3. INCLUDE - There is no perfected sale yet as of December 31, 2013
4. INCLUDE - The term FOB supplier's warehouse is synonymous with FOB shipping point

5. EXCLUDE - There is already a constructive delivery since the article was specifically made
according to the customer's specifications and the article is already completed on December 31,
2013
Problem 10-11

Inventory before adjustment 7,600,000.00


Goods out on consignment 1,000,000.00
Goods purchased FOB shipping point 250,000.00
Goods sold FOB shipping point (850,000.00)
Goods sold FOB destination 260,000.00
Goods sold FOB destination 840,000.00
Correct December 31 inventory 9,100,000.00
Problem 10-12

Inventory per book 5,000,000.00


Merchandise transferred to delivery department 80,000.00
Imported merchandise 800,000.00
Merchandise shipped FOB destination incorrectly included (25,000.00)
Correct inventory - 12/31/2012 5,855,000.00
Problem 10-13

Unadjusted Inventory AP Net Sales


1,750,000 1,200,000 8,500,000
1 (35,000)
2 50,000 50,000
3 20,000
4 26,000 (40,000)
5 25,000
6 30,000
7 60,000
8 10,000 20,000 -
161,000 130,000 (75,000)
Adjusted 1,911,000 1,330,000 8,425,000
Problem 10-14

Inventory per book 950,000.00


Item 3 (18,500 - 1,000 / 140%) 12,500.00
Item 4 (50,000 + 2,500) 52,500.00
Item 5 (35,000/140% = 25,000 + 2,000) 27,000.00
Adjusted inventory 1,042,000.00
Problem 10- 15

Inventory Accounts payable Net sales


Unadjusted 1,250,000.00 1,000,000.00 9,000,000.00
1 (165,000.00) (165,000.00) -
2 (20,000.00) - -
3 - - 40,000.00
4 210,000.00 - -
5 25,000.00 25,000.00 -
Adjusted 1,300,000.00 860,000.00 9,040,000.00
Problem 10-16

1 Physical inventory - November 30, 2012 6,057,000.00


Undersatement 300,000.00
Overstatement (220,000.00)
Understatement due to footing 15,000.00
Obsolete materials (25,000.00)
Correct inventory - November 30, 2012 6,127,000.00

2 Cost of slaes - December 6,860,000.00


Direct labor (1,380,000.00)
Overhead (200% x 1,380,000) (2,760,000.00)
Obsolete materials - November (25,000.00)
Materials used - December 2,695,000.00
Excessive scrap - December 80,000.00
Materials issued - December 2,775,000.00

Inventory - November 30 5,770,000.00


Direct labor - December (1,000,000.00)
Overhead - November (200%) (2,000,000.00)
Materials - November 30 2,770,000.00
Purchases - December 2,470,000.00
Materials available for use 5,240,000.00
Materials issued - December (2,775,000.00)
Materials - December 2,465,000.00

Direct labor - November 30 1,000,000.00


Direct labor - December 1,210,000.00
Total 2,210,000.00
Direct labor in cost of sales for December (1,380,000.00)
Direct labor in inventory - December 830,000.00

Materials - December 31 2,465,000.00


Direct labor 830,000.00
Overhead (200% x 830,000) 1,660,000.00
Total inventory - December 31 4,955,000.00
Problem 10-17

Requirement a
Periodic System Perpe
1. Purchases 800,000.00 1. Merchandise inventory
Accounts payable 800,000.00 Accounts payable

2. Accounts payable 50,000.00 2. Accounts payable


Purchase returns 50,000.00 Merchandise inventory

3. Accounts payable 600,000.00 3. Accounts payable


Cash 600,000.00 Cash

4. Accounts receivable 1,580,000.00 4. Accounts receivable


Sales 1,580,000.00 Sales

Cost of sales
Merchandise inventory

5. Sales return 40,000.00 5. Sales return


Accounts receivable 40,000.00 Accounts receivable

Merchandise inventory
Cost of sales

6. Cash 1,360,000.00 6. Cash


Accounts receivable 1,360,000.00 Accounts receivable

7. Inventory - Dec. 31 60,000.00 7. Inventory storage


Income summary 60,000.00 Merchandise inventory
(60 x 1,000)
Merchandise inventory per book
Physical count
Shortage

Requirement b
Periodic System Perpe
Inventory - January 1 90,000.00 Cost of sales recorded
Purchases 800,000.00 (790,000 - 20,000)
Purchase returns (50,000.00) 750,000.00 Inventory shortage
Goods available for sale 840,000.00 Adjusted cost of sales
Less: Inventory - December 31 60,000.00
Cost of sales 780,000.00
Perpetual System
rchandise inventory 800,000.00
Accounts payable 800,000.00

ounts payable 50,000.00


Merchandise inventory 50,000.00

ounts payable 600,000.00


600,000.00

ounts receivable 1,580,000.00


1,580,000.00

790,000.00
Merchandise inventory 790,000.00

40,000.00
Accounts receivable 40,000.00

erchandise inventory 20,000.00


Cost of sales 20,000.00

1,360,000.00
Accounts receivable 1,360,000.00

entory storage 10,000.00


Merchandise inventory 10,000.00

handise inventory per book 70,000.00


60,000.00
10,000.00

Perpetual System
of sales recorded
(790,000 - 20,000) 770,000.00
tory shortage 10,000.00
ted cost of sales 780,000.00
Problem 10-18

Company A
List price 500,000.00
Less: First trade discount (20% x 500,000) 100,000.00
400,000.00
Second trade discount (10% x 400,000) 40,000.00
360,000.00
Third trade discount (10% x 360,000) 36,000.00
Invoice price 324,000.00
Less: Cash discount (2% x 324,000) 6,480.00
Payment within the discount period 317,520.00

Company B
List price 500,000.00
Less: Trade discount (35% x 500,000) 175,000.00
Invoice price 325,000.00
Less: Cash discount (2% x 325,000) 6,500.00
Payment within the discount period 318,500.00
Problem 10-

Requirement a
Gross method Net metho
1. Purchases 4,750,000.00 1. Purchases
Accounts payable 4,750,000.00 Accounts payable

2. Freight in 250,000.00 2. Freight in


Cash 250,000.00 Cash

3. Accounts payable 1,650,000.00 3. Accounts payable


Cash 1,617,000.00 Cash
Purchase discount 33,000.00
Accounts payable
Accounts payable 2,100,000.00 Purchase discount lost
Cash 2,100,000.00 Cash

4. No entry 4. Purchase discount lost


Acounts payable
(1,000,000 x 2%)

5. Inventory 1,000,000.00 5. Inventory


Income summary 1,000,000.00 Income summary

Requirement b
Gross method Net method
Purchases 4,750,000.00 4,655,000.00
Freight in 250,000.00 250,000.00
Total 5,000,000.00 4,905,000.00
Less: Purchse discounts 33,000.00 ___
Goods available for sale 4,967,000.00 4,905,000.00
Less: Inventory - December 31 1,000,000.00 981,000.00
Cost of sales 3,967,000.00 3,924,000.00

Ending inventory:
Gross (5,000,000/5) 1,000,000.00
Net (4,905,000/5) 981,000.00
Net method
4,655,000.00
4,655,000.00

250,000.00
250,000.00

1,617,000.00
1,617,000.00

2,058,000.00
42,000.00
2,100,000.00

20,000.00
20,000.00

981,000.00
981,000.00
Problem 10-20

1. Merchandise inventory 1,000,000.00 1. Merchandise invent


Accounts payable 1,000,000.00

2. Accounts payable 50,000.00 2. Accounts payable


Cash 50,000.00

3. Accounts payable 800,000.00 3. Accounts payable


Cash 784,000.00
Cost of sales 16,000.00

4. Accounts payable 150,000.00 4. Accounts payable


Cash 150,000.00 Purchase discount lo

5. Cash 1,200,000.00 5. Cash


Sales 1,200,000.00

Cost of sales 700,000.00 Cost of sales


Merchandise inventory 700,000.00
(1,000,000 x 70%)
Merchandise inventory 980,000.00
Accounts payable 980,000.00

Accounts payable 50,000.00


Cash 50,000.00

Accounts payable 784,000.00


Cash (800,000 x 98%) 784,000.00

Accounts payable 146,000.00


Purchase discount lost 4,000.00
Cash 150,000.00

Cash 1,200,000.00
Sales 1,200,000.00

Cost of sales 686,000.00


Merchandise inventory 686,000.00
(980,000 x 70%)