CONS Corporation is currently preparing its interim financial statements as of and for the interim period ended September 30, 2018. The beginning inventory and the transactions that transpired from January 1, 2018 to September 30, 2018 are as follows: Inventory, January 1
1,200,000
Purchases
11,600,000
Purchase returns
225,000
Purchase discounts
735,000
Freight in
520,000
Sales
14,095,000
Sales returns
200,000
Sales discounts
400,000
Employee discounts
105,000
Requirements: 1. If the company is using a gross profit rate based on sales of 30%, a. What is the cost of goods sold for the interim period? b. What is the estimated ending inventory as of the end of the interim period? 2. If the company is using a gross profit rate based on cost of 40%, a. What is the cost of goods sold for the interim period? b. What is the estimated ending inventory as of the end of the interim period?
The warehouse of your client, NESS Corporation, was destroyed by fire on October 2, 2018. All of the inventory stored in the warehouse were also destroyed, and you were engaged to estimate the fire loss related to the inventory. Retrieved were the records pertaining to the inventory of y our client, which shows the following information covering January 1 to S eptember 30: Purchases
1,766,500
Purchase discounts
22,500
Purchase returns
3,000
Sales
2,518,000
Sales returns
20,000
Sales discounts
8,000
Discounts granted to employees
2,000
You have determined that the appropriate gross profit rate to be applied in 2018 is based on the average gross profit rate for the past three years (round gross profit rate to the nearest percentage; i.e. xx%). A summary of the previous performance of your client (for 2015, 2016, and 2017) is presented below: 2015 Beginning inventory Net purchases Ending inventory Sales
2016
2017
424,830
516,630
525,520
1,322,300
1,433,890
1,500,430
516,630
525,520
524,000
2,000,000
2,439,000
2,500,800
As of the date of fire, inventory costing P58,000 is still in transit, including a purchase made in October 1 for P12,000 which was not yet recorded by your client. The term is FOB shipping point. Damaged inventory with cost of P3,000 was sold at cost after the fire . No other transactions occurred from September 30 to October 2. Requirements: 1. What is the average cost ratio? 2. What is the entity’s net sales for the purpose of determining the loss from the fire? 3. What is the estimated inventory as of October 2, 2018 before the fire? 4. What is the estimated loss on fire?
SOUPIE, Inc., your audit client, is keeping a record of their inventory at cost with their corresponding selling price. Your client’s record revealed record revealed the following information related to their inventory on September 30, 2018: Cost Inventory, October 1, 2017 Purchases Transportation in
372,000
620,000
3,110,000
4,760,000
55,000
Sales Purchase return
4,872,000 27,000
Sales allowance Purchase allowance
Retail
45,000 125,500
18,500
Sales returns
355,000
Sales discounts
322,250
Purchase discounts
15,960
Normal breakages Abnormal breakages
50,500 200,000
308,000
Discounts granted to employees
75,500
Departmental transfer out
135,500
175,000
Departmental transfer in
125,500
165,000
Mark ups
290,000
Mark downs
283,000
Mark up cancellations
40,000
Mark down cancellations
40,000
The company reported inventories per a physical count conducted on September 30 at P225,000. You ascertained that the count conducted was adequately made by the client. You used the retail inventory method of estimating ending inventory to check whether the amount per count is reasonable, and whether there is a shortage in the inventory. Note:roundoffpercentagestowholenumber(forinstance,78.43%is78%). Requirement: Compute for the cost of inventory shortage under 1. The conventional retail method 2. The average cost retail method 3. The FIFO retail method
LORDS Corporation uses the l ower of cost and net realizable value in presenting its inventory. Data regarding the company’s inventories are as follows: Finished Goods
AAA
BBB
CCC
Cost
550,000
540,000
430,000
Selling price
675,000
620,000
820,000
20%
15%
15%
Cost
240,000
188,000
320,000
Selling price
360,000
289,000
735,000
48,000
97,650
74,000
208,000
168,000
375,000
25%
35%
40%
Estimated cost to sell, as % of sales Work-in-process
Estimated cost to complete Replacement cost Normal profit margin as % of selling price Raw Materials - Item AAA
A001
A002
A003
Cost
250,000
500,000
400,000
Current purchase price
250,000
480,000
375,000
Raw Materials - Item BBB
B001
B002
B003
Cost
400,000
300,000
200,000
Current purchase price
450,000
275,000
180,000
Raw Materials - Item CCC
C001
C002
Cost
375,000
450,000
Current purchase price
395,000
420,000
The beginning balances of the following accounts are as follows: Allowance for Inventory Writedown - Finished Goods Allowance for Inventory Writedown – Work-in-Process Allowance for Inventory Writedown - Raw Materials
10,000 0 40,000
Requirements: 1. What is the correct Finished Goods inventory to be reported at the balance sheet date for a. AAA? b. BBB? c. CCC? 2. What is the correct Work-in-process inventory to be reported at the balance sheet date for a. AAA? b. BBB? c. CCC? 3. What is the correct total raw materials for AAA to be reported at the balance sheet date? 4. What is the correct total raw materials for BBB to be reported at the balance sheet date? 5. What is the correct total raw materials for CCC to be reported at the balance sheet date? 6. What is the total loss on inventory write-down to be reported for the period?
The balances of the inventories of Turon Corporation are presented below: Dec. 31, 2017
Dec. 31, 2018
Finished goods
815,000
780,000
Work-in-process
340,000
354,000
Raw materials
200,000
185,000
The allowance for inventory writedown for the finished goods as of December 31, 2017 is at P15,000.
Audit notes: The entity purchased P1,200,000 worth of raw materials for 2018. 80% of the purchases were on ac count. P25,000 worth of raw materials are still in transit as of December 31, 2018. It was included in the ending inventory, but was only recorded as purchase in January 5, 2019. The term is FOB shipping point. Factory overhead for the year total to P840,000, which is 20% more than the direct labor. The estimated selling price of the finished goods is P800,000 and the estimated cost to sell the goods is at 4% of its selling price. Requirements: 1. What is the required allowance for inventory writedown on December 31, 2018? 2. Provided that any inventory writedown or reversal of inventory writedown is closed to cost of goods sold, how much is t he cost of goods sold for 2018?
