ACC 122_QUIZ_INVENTORY_02/07/2019

(Cost of Inventory)
1. BSA Company, a manufacturer of small tools, provided the following information for the year ended 12/31/19
Inventory at December 31 based on physical count 1,750,000
Accounts payable at December 31 1,200,000
Net Sales (sales less sales return) 8,500,000
Additional information is as follows:
a. Included in the physical count were tools billed to a customer FOB shipping point on December 31,
2019. These tools had a cost of P 28,000 and were billed at P 35,000. The shipment was in loading
dock waiting to be picked up by the common carrier.
b. Tools shipped to a customer FOB destination on December 26, 2019, were in transit on December 31,
2019, and had a cost of P 25,000. Upon notification of receipt by the customer on January 2, 2020,
Quarry Company issued a sales invoice for P 42,000.
c. Goods, with an invoice cost of P 30,000, received from a vendor at 5:00 PM on December 31, 2019,
were recorded on a receiving report dated January 2, 2020. The goods were not included in the
physical count, but the invoice was included in accounts payable on December 31, 2019.
d. Goods received from a vendor on December 26, 2019 were included in the physical count. However,
the related P 60,000 vendor invoice was not included in accounts payable on December 31, 2019,
because the accounts payable copy of the receiving report was lost
What is the correct balance of inventory as of December 31, 2019?
a. 1,752,000 b. 1,780,000 c. 1,805,000 d. 1,717,000

2.The PogiCo. In its balance sheet as of 12/31/2019 has an inventory the amount of P176,000 which consists of:
Direct materials P55,000
Direct materials purchases in transit, FOB destination 12,000
Direct materials purchases in transit, FOB shipping point 9,000
Prepaid insurance on inventory 2,000
Work-in-process 38,000
Finished goods 45,000
Goods shipped on consignment, at selling price with 20% profit on sales 15,000
What is the cost of inventory to be shown in the statement of financial position of PogiCo. as of 12/31/19?
a. P162,500 b. P150,000 c. P159,000 d. P159,500

(Inventory Cost Flow)

Use the information below to answer the next four (4) questions:
Resolute Company’s inventory transactions for August of the current year were as follows:
Units Unit Cost Total Cost
Aug 1 Beginning 20,000 4.00 80,000
7 Purchase 10,000 4.15 41,500
12 Sale 15,000
16 Purchase 20,000 4.75 95,000
20 Sale 15,000
28 Sale return 3,000
Compute for the cost of inventory using:
3. FIFO- Periodic a. 109,500 b. 107,450 c. 92,450 d. 99,590
4. Weighted ave. – periodic a. 109,500 b. 107,450 c. 92,450 d. 99,590
5. LIFO- Periodic a. 109,500 b. 107,450 c. 92,450 d. 99,590
6.Under the moving average method, what is the cost of sales for the month of August?
a. 102,350 b. 114,150 c. 127,500 d.130,000

7. In November 2019, Fischer Company entered into a non-cancellable contract to purchase inventory for
P120,000 in March 2020. The value of the inventory was expected to be worth P 130,000 at the time of
purchase. On December 31,2019, the market value of the inventory was P100,000. Which of the following
items would be reported in the 2019 income statement?
A. P 100,000 included in the cost of goods sold C. P 20,000 loss on purchase commitment
B. P 20,000 gain on purchase commitment D. Nothing would be reported in the 2014 income statement

8. Journal entry on December 31, 2019: ___________.

(LCNRV)
9. Jovit Enterprises Inc. a retailer of Italian furniture and has five major product lines: sofas, dining tables, beds,
closets, and lounge chairs. At December 31, 2019, quantity on hand, cost per unit, and net realizable value
(NRV) per unit of the product lines are as follows
Product line Quantity Cost per unit NRV per unit
Sofas 100 P1000 P1020
Dining Tables 200 500 450
Beds 300 1500 1600
Closets 400 750 770
Lounge Chairs 500 250 200
In Jovit’s December 31,2019 statement of financial position, Inventory should be carried at
a. P1,075,000 b. P 1,080,000 c. P 1,040,000 d. P 1,115,00

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 10. At the beginning of the current year, PASAR Co. purchased a tract of land for P 12,000,000. The entity
incurred additional cost of P 3,000,000 during the remainder of the year in preparing the land for sale. The
tract was subdivided into residential lots as follows:
Lot class Number of lots Sales price per lot
A 100 240,000
B 100 160,000
C 200 100,000
Using the relative sales value method, what amount of cost should be allocated for each class of lot?
a. Lot A, 4,000,000; Lot B, 6,000,000; Lot C, 5,000,000
b. Lot A, 6,000,000; Lot B, 4,000,000; Lot C, 5,000,000
c. Lot A, 3,000,000; Lot B, 7,200,000; Lot C, 4,800,000
d. Lot A, 7,200,000; Lot B, 4,800,000; Lot C, 3,000,000

(Gross profit method)

11. An entity budgeted the following sales.
June July August
Sales on account 1,800,000 1,840,000 1,900,000
Cash sales 180,000 200,000 260,000
All merchandise is marked up to sell at invoice cost plus 20%. Merchandise inventory at the beginning of each month
is 30% of that month's projected cost of goods sold. What is the amount of anticipated purchases for July?
a. 1,632,000 b. 2,076,000 c. 1,700,000 d. 1,730,000

12. On August 15, 2019, a typhoon damaged a warehouse of Parlophone Merchandise Company. The entire
inventory and many accounting records stored in the warehouse were completely destroyed. Although the
inventory was not insured, a portion could be sold for scrap. Through the use of the remaining records, the
following data are assembled:
Inventory, January 1 P 375,000
Purchases, January 1-August 15 1,385,000
Cash sales, January 1-August 15 225,000
Collection of accounts, Jan. 1-Aug. 15 2,115,000
Accounts Receivable, January 1 175,000
Accounts Receivable, August 15 265,000
Salvage value of inventory 5,000
Gross profit percentage on sales 32%
Compute the inventory loss as a result of the typhoon.
a. P107,600 b. P102,600 c. P104,200 d. P255,600

(Retail inventory method)

Use the information below to answer the next questions.
The records of FINISHED NA Dep. Store report the following data for the month of Dec. 2019:

Sales P7,100,000
Sales allowance 100,000
Sales returns 500,000
Employee discounts 200,000
Theft and other losses 100,000
Initial markup on purchases 2,900,000
Additional mark up 250,000
Mark up cancellations 100,000
Mark down 600,000
Mark down cancellations 100,000
Freight on purchases 100,000
Purchases at cost 4,500,000
Purchase returns at cost 240,000
Purchase returns at sales price 350,000
Beginning inventory at cost 440,000
Beginning inventory at sales price 800,000

Compute the cost of inventory using:

13. Average cost approach: a.P360,000 b. P 384,000 c. P 390,000 d. P448,000
14. Conservative approach: a.P360,000 b. P 384,000 c. P 390,000 d. P448,000
15. FIFO Approach: a.P360,000 b. P 384,000 c. P 390,000 d. P448,000

“Don’t panic. I’m with you. There’s no need to fear for I’m your God. I’ll give you strength. I’ll help you. I, your
God, have a firm grip on you and I’m not letting go.”- Isaiah 41:10,13

God Bless 😊 - Jovit

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