Intacc 1 INTERMEDIATE ACCOUNTING PDF

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Which inventory pricing method best approximates specific identification in most manufacturing situations? ~Activity-based costing ~LIFO ~Average cost Correct: FIFOIf an entity ended a period with a larger inventory that is had at the beginning of the period, which of the following statements is tru...

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FA Mod2 Which inventory pricing method best approximates specific identification in most manufacturing situations? ~Activity-based costing ~LIFO ~Average cost Correct: FIFO

method, the computation of the ratio of cost to retail should ~Ignore both markups and markdowns ~Include markups and markdowns ~Include markdowns but not markups Correct: Include markups but not markdowns

If an entity ended a period with a larger inventory that is had at the beginning of the period, which of the following statements is true? ~The cost of goods available for sale was smaller than cost of goods sold ~Net income was greater than gross profit ~The cost of goods sold was greater than the net purchases Correct: The cost of goods sold was smaller than net purchases

The gross profit method of determining inventory provides an estimate of inventory based on ~opening inventory, sales and inventory turnover ~cost of sales, inventory turnover, sales and gross profit margin ~opening inventory, cost of sales and inventory turnover Correct: opening inventory, purchases, sales and gross profit margin

When determining the unit cost of an inventory item, which of the following should not be included? ~Depreciation of plant equipment used in manufacturing ~Labor cost of the item when manufactured ~Commission paid when purchased Correct: Interest on loan obtained to purchase the item In a periodic system, the beginning inventory is ~Net purchases minus cost of goods sold ~Total goods available for sale minus cost of goods sold ~Net purchases minus ending inventory Correct: Total goods available for sale minus net purchases Inventories shall be measured subsequently at ~Net realizable value ~Higher of cost and net realizable value ~Cost Correct: Lower of cost and net realizable value Which of the following items should be included in a company's inventory at the balance date? ~Goods in transit that were purchased f.o.b. destination ~Goods received from another company for sale on consignment ~Goods owned by a customer that are being held for the customer to call for at his or her convenience Correct: none of these

Which inventory pricing method best approximates specific identification in most manufacturing situations? ~LIFO ~Activity-based costing ~Average cost Correct: FIFO To produce an inventory valuation which approximates the lower of cost or market using the retail inventory

Which of the following describes the flow of product costs through the inventory accounts of a manufacturer? ~Raw materials, direct labor, factory overhead ~Raw materials, goods in process, factory overhead, finished goods ~Raw materials, direct labor, factory overhead, finished goods Correct: Raw materials, goods in process, finished goods Bay purchased merchandise on account for P10,000 from Beth with term FOB shipping point. The freight cost was P1,500 and was paid by Bay. Upon the arrival of the carrier, it was found out that the merchandise got lost while in transit. The carrier company accepted the loss as their fault. How much is the subsequent collection of Beth from Bay? Correct:10,000 Computation: FOB shipping point – buyer Freight cost – buyer (freight collect) Beth – seller’s POV 1st entry 2nd entry

A/R Sales Cash A/R

10000 10000 10000 10000

Goods worth P12,000 was shipped on account, 2/10, n/30 to Buyan Company on January 15, 2021 from Ruben Company. The term of the shipment was FOB shipping point. Ruben paid freight of P950. On January 12, 2021, P2,500 worth of merchandise was received by Ruben due to wrong specification. Buyan made a partial payment of P5,000. How much is the subsequent collection of Ruben assuming Buyan paid within the discount period? Correct: 5,260 Computation: FOB shipping point – buyer Freight cost – seller (freight prepaid) Ruben – seller’s POV Jan 15

A/R

12,950 Sales Cash

12,000 950

FA Mod2 Sales Return A/R

2,500

Cash

5,000

2,500

A/R

5,000

Cash Sales Discount (12000-2500)x2% A/R

5,260 190

Jan 15

18500 1500

Purchases N/P A/P A/P

A/P





25,000

Merchandise costing P90,000, shipped FOB shipping point from a vendor on December 31, 2021, was received and recorded on January 5, 2022. Goods in the shipping area were excluded from inventory although shipment was not made until January 4, 2022. The goods, billed to the customer FOB shipping point on December 30, 2021, had a cost of P120,000.

What amount should Hershey report as inventory in its December 31, 2021 balance sheet? Correct: 1,710,000 Computation: Physical count, Dec.31, 2021 1,500,00 0 FOB Shipping point from vendor, Dec. 90,000 31 FOB Shipping point to buyer 120,000 1,710,00 Inventory 0

10,000 15,000 5,000

Cash Paid

Hershey's inventory on December 31, 2021 was P1,500,000, based on a physical count priced at cost, and before any necessary adjustment for the following:

20000

Merchandise shipped FOB destination to customer was made on January 5, 2021 for P25,000. The customer issued P10,000, 12% 30-day note and the balance 2/10,n/30 on January 10, 2021, the date the goods were received. The customer made a partial payment on January 15, 2021 for P5,000. Payment was made within the discount period. How much discount was granted? Correct: 300 Computation: Jan 5 No entry – FOB destination Jan 10

400,00 0 10,000 (2,000) 408,00 0

5,450

On January 10, 2021, Nihao Company sold merchandise on account FOB destination to Shaoni Company for P20,000. Shaoni paid the freight cost of P1,500 to be deducted from its account. How much did Shaoni paid to Nihao? Correct: 18,500 Computation: FOB Destination – seller Freight cost – buyer (freight collect) Shaoni – buyer’s POV Purchases A/P Cash

Computation: Merchandise purchased for resale Freight-in Purchase Returns Inventoriable cost

5,000

10,000 Purchase Discount 300 (15,000 x 2%) Cash 9,700

The following information applied to Fenny Co. for 2021: Merchandise purchased for resale P 400,000 Freight-in 10,000 Freight-out 5,000 Purchase returns 2,000 Fenny Co's 2021 inventoriable cost was Correct: 408,000

On November 30, Garments' store was destroyed by fire. It had a beginning merchandise inventory of P45,000, it made purchases of P80,000, and recorded sales of P130,000. Its estimated gross profit on sales was 25%. How much is the estimated inventory loss? Correct: 27,500 Inventory information of Cappa Co. shows the following: Beginning inventory

10 units @ P100 per unit

First purchase

35 units @ P110 per unit

First sale Second purchase

20 units 40 units @ P120 per unit

Second sale Third purchase

35 units 15 units @ P130 per unit

The value of the ending inventory using a perpetual inventory system with the FIFO valuation method is

FA Mod2 Correct: 5,550 Computation: Ending inventory = (units) 10 + 35 – 20 + 40 – 35 + 15 = 45 units Third 15 units @ 130 = 1950 purchase Second 30 units @ 120 = 3600 purchse 45 units 5,550

0 Less: COGS: Net Sales Multiply by cost ratio

1,500,00 0 60%

Estimated cost of inventory burned

900,000 270,000

Inventory information of Cappa Co. shows the following:

Beginning inventory

10 units @ P100 per unit

First purchase

35 units @ P110 per unit

Second purchase

40 units @ P120 per unit

Third purchase

15 units @ P130 per unit

If 83 units are sold, the value of the ending inventory under periodic FIFO would be Correct: 2,190 Computation: Ending inventory = (units) 10 + 35 + 40 + 15 - 83 = 17 units Third 15 units @ 130 = 1950 purchase Second 2 units @ 120 = 240 purchse 2,190 17 units On December 31, 2021 Bella Company's inventory burned. Sales and purchases for the year had been P1,500,000 and P980,000, respectively. The beginning inventory was P190,000 and in the past, Bella's gross profit has averaged 40% of selling price. How much is the estimated cost of inventory burned? Correct: 270,000 Computation: Sales 1,500,000 100%

Jonas Company’s accounting records indicated the following information: Inventory, January 1, 2021 Purchases during 2021 Sales during 2021 Sales returns and allowance

500,000

Purchase discount

50,000

2,840,000

Purchase returns Freight-in

150,000

3,600,000 100,000

A physical inventory taken on December 31, 2021 resulted in an ending inventory of P700,000. Jonas’ gross profit on sales has remained constant at 35% in recent years. Jonas suspects some inventory may have been taken by a new employee. At December 31, 2021, what is the estimated cost of missing inventory? Correct: 225,000 Computation: 3,500,000 100% Sales Less: Sales ret +allow COGS 2,275,000 65% Gross Profit

1,225,000

35%

COGS

900,000

60%

Beginning Inv

500,000

Gross Profit

600,000

40%

Purchases

2,840,00 0 60,000

Add: Freight In Net Purchases Beginning Inv

190,000

Purchases GAS

980,000 1,170,00

60,000

Less: Purchase returns Purchase discount CGAS

3,400,00 0 150,000 50,000 3,200,00

FA Mod2 Less: COGS Estimated cost of missing inv

0 2,275,00 0 925,000

Ending Inventory

700,000

Estimated cost of missing inv

225,000

December 31, 2022 P 2,600,000 750,000

Inventory Accounts payable

The company paid its suppliers the year ended December 31, should Tape report as cost of December 31, 2022 statement income? Correct: 5,450,000

December 31, 2021 P 2,900,000 500,000

P4,900,000 during 2022. How much goods sold in its of comprehensive

On December 28, 2021, Cheez Whiz Company purchased goods costing P10,000,000. The terms were FOB destination. The following costs were incurred in connection with the sale and delivery of the goods: Packaging for shipment P200,000

The balance in Coward Company’s accounts payable account at December 31, 2021 was P1,170,000 before any year-end adjustments relating to the following: § Goods were in transit from a vendor to Coward on December 31, 2021. The invoice cost was P65,000 and the goods were shipped FOB shipping point on December 29, 2021. The goods were received on January 2, 2022. § Goods shipped FOB shipping point on December 20, 2021 from a vendor to Coward were lost in transit. The invoice cost was P32,500. On January 5, 2022. Coward filed a P32,500 claim against the common carrier. § Goods shipped FOB destination on December 21, 2021 from a vendor to Coward, were received on January 5, 2022. The invoice cost was P19,500. What amount should Coward report as accounts payable on its December 31, 2021 statement of financial position? Correct: 1,267,500 Computation: A/P Dec 31, 2021 1,170,00 0 FOB shipping point from vendor, Dec 65,000 29 FOB Shipping point from vendor, Dec. 32,500 20 Disregard last shipment – FOB --destination Inventory 1,267,50 0 Tape Company reported the following balances at December 31, 2022 and 2021:

Shipping

300,000

Special handling charges

400,000

These goods were received on December 31, 2021. In Cheez Whiz Company’s December 31, 2021 statement of financial position, how much of these goods should be included in inventory? Correct: 10,000,000 Purchase goods cost 10,000,000

Markup of 25 percent on cost is equivalent to what markup on selling price? 20% Solution: Sales

125%

100%

COGS

100%

80%

Gross Profit

25%

20%

Based on cost to based on sale COGS based on cost

100%

Divided by sales

125%

COGS based on sale

80%

Sales

100%

Less: COGS

80%

Marup on selling price

20%

FA Mod2...