Problem 32-1 (AICPA Adapted)

ABC Company sells merchandise at a gross profit of 30%. On June

30, 2016, all of the inventory was destroyed by fire.
The following figures pertain to the operations for the six
months ended June 30, 2016:
Net sales 40,000,000
Beginning inventory 10,000,000
Net purchases 26,000,000
What is the estimated cost of the destroyed inventory?
a. 24,000,000
b. 14,000,000
c. 8,000,000
d. 4,000,000

Problem 32-2 (AICPA Adapted)

ABC Company reported during the current year (2016) beginning
inventory P2,500,000, net purchase P12,500,000 and net sales
P16,000,000. A physical count at year-end resulted in an
inventory of P2,875,000. The gross profit on sales had remained
constant at 25%. The entity suspected that some inventory may
have been taken by a new employee.
What is the estimated cost of missing inventory at December
31,2016?
a. 500,000
b. 875,000
c. 1,125,000
d. 125,000

Problem 32-3 (AICPA Adapted)

During the current year, ABC Company reported beginning
inventory P1,500,000, ending inventory P900,000, sales
P13,750,000, and gross margin of 20% on sales.
What amount was reported as purchases?
a. 11,600,000
b. 10,400,000
c. 11,100,000
d. 10,100,000

Problem 32-4 (AICPA Adapted)

ABC Company had an explosion in a plant that destroyed most of
the inventory.
The records the following information during the current year:
Beginning inventory 2,000,000
Purchases 24,000,000
Sales 31,000,000
Gross profit percentage 25%
The entity can sell some of the damaged inventory for P250,000.
The insurance company will reimburse the entity for 70% of the
loss.
What amount should be reported as loss from explosion?
a. 750,000
b. 900,000
C. 2,500,000
d. 1,750,000

Problem 32-5 (AICPA Adapted)

ABC Company provided the following information at December 31,
2016:
Inventory, January 1 3,250,000
Purchases 11,500,000
Purchase returns 400,000
Freight in 300,000
Sales 17,000,000
Sales discounts 100,000
Sales returns 150,000
On December 31,2016, a physical inventory revealed that the
ending inventory was only P2,100,000. The gross profit on sales
has remained constant at 30% in recent years.The entity
suspected that some inventory may have been pilfered by one of
the entitys employees.
On December 31,2016, what is the estimated cost of missing
inventory?
a. 755,000
b. 825,000
c. 2,100,000
d. 2,925,000

Problem 32-6 (AICPA Adapted)

On October 31,2016, ABC Company reported that a flood caused
severe damage to the entire inventory.
Based on recent history, the entity has a gross profit of 25%
of sales.
The following information is available from the records for ten
months ended October 31, 2016:
Inventory January 1 2,600,000
Purchases 20,600,000
Purchase returns 300,000
Sales 28,000,000
Sales returns 2,000,000
Sales allowances 500,000
A physical inventory disclosed usable damaged goods which can
be sold for P350,000.
What is the estimated cost of goods sod for the ten months ended
October 31, 2016?
a. 16,800,000
b. 19,150,000
c. 19,500,000
d. 19,125,000

Problem 32-7
On September 30, 2016, ABC Company reported that a fire caused
a severe damage to the entire inventory. The entity has a gross
profit of 30% on cost. The following data are available for nine
months ended September 30, 2016:
Inventory at January 1 5,500,000
Net purchases 30,000,000
Net sales 36,400,000
A physical inventory disclose usable damaged goods which can be
sold for P500,000.
What is the estimated cost of goods sold for the nine months
ended September 30,2015?
a. 27,500,000
b. 24,850,000
c. 25,480,000
d. 28,000,000

Problem 32-8 (AICPA Adapted)

ABC Company provided the following information for the current
year:
Net sales 18,000,000
Freight in 450,000
Purchase discounts 250,0000
Ending inventory 1,200,000
Gross margin on sales 40%

What is the cost of goods available for sale?

a. 8,400,000
b. 9,600,000
c. 12,000,000
d. 12,200,000

Problem 32-9 (IAA)

ABC Company estimated the cost of physical inventory on March
31 for use in interim financial statement. The rate of markup
on cost is 25%. The inventory on January 1 was P27,500,000.
During the period January 1 to March 31, the entity had
purchases of P21,500,000, purchase returns of P1,000,000 and
sales of P37,500,000.
What is the estimated cost of inventory on March 31?
a. 10,500,000
b. 18,000,000
c. 19,875,000
d. 14,000,000
Problem 32-10 (IAA)
A fire destroyed ABC Companys inventory on October 31. On
January 1, the inventory had a cost of P12,500,000. During the
period January 1 to October 31, the entity had net purchases of
P37,500,000 and net sales of P75,000,000. Undamaged inventory
at the date of fire had a cost of P750,000. The mark up on cost
is 66 2/3%.
What was the cost of inventory destroyed by fire?
a. 19,250,000
b. 20,000,000
c. 5,000,000
d. 4,250,000

Problem 32-11 (AICPA Adapted)

ABC Company provided the following information during the first
year of operations:
Total merchandise purchases for the year 35,000,000
Merchandise inventory on December 31 7,000,000
Collections from customers 20,000,000

All merchandise was marked to sell at 40% above cost. All sales
are on a credit basis and all receivables are collectible.
What is the balance of accounts receivable on December 31?
a. 5,000,000
b. 19,200,000
c. 25,000,000
d. 29,000,000

Problem 32-12 (IAA)

ABC Company sells merchandise on consignment basis to dealers.
The selling price of the merchandise averages 25% above cost.
The dealer is paid a 10% commission of the sales price or all
sales made. All dealer sales are made on a cash basis.
The following consignment activities occurred during the current
year:
Manufacturing cost of good shipped on consignment 44,000,000
Sales price of merchandise sold by dealers 48,000,000
Payments remitted by dealers after
deducting commission 31,500,000

What is the gross profit on sales?

a. 12,000,000
b. 9,600,000
c. 8,500,000
d. 6,100,000