Problem 34-1 (AICPA Adapted)

On December 31, 2016, ABC Company provided the following

information:
Cost Retail
Inventory, January 1 3,675,000 5,075,000
Purchases 20,825,000 28,875,000
Additional markups - 1,050,000
Available for sale 24,500,000 35,000,000
Sales for the year totaled P27,650,000. Markdowns amounted to
P350,000.
Under the approximate lower of average cost or market rental
method, what is the inventory on December 31, 2016?
a. 7,700,000
b. 7,000,000
c. 5,390,000
d. 4,900,000

Problem 34-2 (IAA)

ABC Company uses the conservative retail method. The following
information relating to the inventory was gathered at December
21, 2016:
Cost Retail
Beginning inventory 2,650,000 4,500,000
Purchases 30,400,000 43,500,000
Purchase discount 425,000
Freight in 525,000
Markups 3,000,000
Markdowns 4,000,000
Sales 43,000,000
Sales discounts 500,000

What is the estimated cost of ending inventory?

a. 2,600,000
b. 2,840,000
c. 4,000,000
d. 2,925,000

Problem 34-3 (AICPA Adapted)

ABC Company used the retail inventory method to estimate
inventory at December 31, 2016.
Cost Retail
Beginning inventory 3,600,000 5,000,000
Purchases 20,400,000 31,500,000
Net markups 3,500,000
Net markdowns 2,500,000
Sales 34,100,000
Estimated normal shoplifting losses 400,000
Under the average cost retail method, what is the estimated cost
of ending inventory?
a. 2,040,000
b. 3,000,000
c. 1,800,000
d. 1,920,000

Problem 34-4 (IAA)

ABC Company used the average retail inventory method. At
December 31, 2016, the following information relating to
inventory was gathered:
Cost Retail
Beginning inventory 950,000 2,250,000
Purchases 14,950,000 21,750,000
Purchase discount 200,000
Freight in 750,000
Markups 1,500,000
Markdowns 2,000,000
Sales 22,000,000
Sales return 500,000
Sales discount 250,000
Sales allowance 150,000

What is the estimated cost of the ending inventory?

a. 2,000,000
b. 1,400,000
c. 1,225,000
d. 1,575,000

Problem 34-5 (PHILCPA Adapted)

ABC Company used the average cost retail inventory method and
showed the following information for the current year:
Cost Retail
Beginning inventory 2,800,000 7,000,000
Sales 50,000,000
Purchases 24,800,000 51,600,000
Freight in 750,000
Markup 5,000,000
Markup cancelation 600,000
Markdown 2,500,000
Markdown cancelation 500,000
Estimated normal shrinkage is 2.5% of sales.

What is the estimated cost of ending inventory?

a. 2,300,000
b. 4,387,500
c. 4,950,000
d. 4,485,000

Problem 34-6 (AICPA Adapted)

ABC Company used the average cost retail inventory method to
account for inventory. The following information related to
operations for the current year:
Cost Retail
Beginning inventory and purchases 30,000,000 46,000,000
Net markups 2,000,000
Net markdowns 3,000,000
Sales 39,000,000

What amount should be reported as cost of goods sold for the

current year?
a. 24,000,000
b. 24,375,000
c. 26,000,000
d. 26,250,000

Problem 34-7 (IAA)

ABC Company had the following amounts all at retail:
Beginning inventory 900,000
Purchases 30,000,000
Purchase return 1,500,000
Net markup 4,500,000
Net markdown 700,000
Sales 18,000,000
Sales return 450,000
Employee discounts 400,000
Normal shortage 650,000
Abnormal shortage 1,000,000

What is the ending inventory at retail?

a. 13,600,000
b. 14,000,000
c. 14,400,000
d. 14,600,000

Problem 34-8 (PHILCPA Adapted)

At the beginning of the current year, the inventory of ABC
Company was P5,000,000 at retail and P2,800,000 at cost. During
the current year, the entity registered the following purchases:
Cost 20,000,000
Retail price 31,000,000
Original markup 11,000,000
The total net sales was P27,000,000. The following reductions
were made in the retail price:
To meet price competition 250,000
To dispose overstock 150,000
Miscellaneous reductions 600,000
During the current year the selling price of a certain inventory
increased from P1000 to P1,500. This additional markup applied
to 5,000 items but was later canceled on the remaining 1000
items.
What is the estimated cost of ending inventory using the average
cost retail method?
a. 10,000,000
b. 12,000,000
c. 6,200,000
d. 6,000,000

Problem 34-9 (IAA)

ABC Company used the average cost retail inventory method. The
entity provided the following information for the current year:
Cost Retail
Beginning inventory 8,250,000 11,000,000
Net purchases 18,625,000 24,750,000
Departmental transfer - credit 1,000,000 1,500,000
Net markup 750,000
Inventory shortage - sales price 500,000
Employee discounts 1,000,000
Sales (including sales of P2,000,000
of items which were marked down
from P2,500,000) 20,000,000

What is the estimated cost of ending inventory?

a. 9,750,000
b. 13,000,000
c. 9,620,000
d. 11,250,000

Problem 34-10 (AICPA Adapted)

ABC Company had always inventoried finished goods at selling
price and prepared the following statement on this basis:
Sales 7,000,000
Raw materials used at cost 2,500,000
Labor 3,000,000
Overhead 1,200,000
Total 1,340,000
Work in process at cost:
January 1 3,060,000
December 31 3,760,000 700,000
Cost of goods manufactured 6,000,000
Finished goods at selling price
January 1 1,200,000
December 31 4,200,000 3,000,000 3,000,000
Gross income 4,000,000
What is the cost of goods sold?
a. 2,500,000
b. 1,000,000
c. 4,200,000
d. 3,000,000

Problem 34-11 (AICPA Adapted)

ABC Company used the FIFO retail method of inventory valuation.
The entity provided the following information for the current
year:
Cost Retail
Beginning inventory 3,000,000 7,500,000
Purchases 15,000,000 27,500,000
Net additional markups 2,500,000
Net markdowns 5,000,000
Sales revenue 22,500,000
What is the estimated cost of ending inventory?
a. 6,000,000
b. 5,200,000
c. 5,000,000
d. 4,800,000

Problem 34-12 (IAA)

ABC Company used the LIFO retail method of inventory valuation.
The entity provided the following information for the current
year:
Cost Retail
Beginning inventory 6,000,000 7,500,000
Net purchases 21,000,000 29,500,000
Net markups 1,000,000
Net markdowns 500,000
Net sales 27,500,000
What is the estimated cost of ending inventory?
a. 7,000,000
b. 7,750,000
c. 7,200,000
d. 7,300,000