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INVENTORIES
PROBLEMS
Include Exclude
Goods displayed in the store
Goods stocked in the warehouse, not covered by any sales
contract
Goods purchased, in transit, shipped FOB seller
Goods purchased, in transit, shipped FOB destination
Freight cost on goods received, goods are still unsold
Goods held on consignment
Goods out on consignment
Goods out to customers on approval
Goods in the hands of traveling salesmen
Goods sold with a buyback arrangement for the full selling
price and other costs incurred by the buyer
Unused factory supplies and indirect materials
Goods which require additional processing
Direct materials stocked in the warehouse
Storage costs of goods completed
Insurance premiums paid on stocked goods
Goods completed, manufactured to customers specification,
awaiting instruction for delivery by the customer
Freight paid on goods sold
Unused supplies for administrative purposes
Unused store supplies
Goods sold with a right to return granted to buyers, amount
of return is reasonably predictable.
Goods sold under FAS, at the port designated by the buyer
Goods at the port, purchased CIF
PROBLEMS
FIFO
Cost of ending inventory:
275 x 11.75 3,231.25
25 x 11.00 275.00 3,506.25
Cost of goods sold:
Cost of goods available for sale 8,056.25
Less ending inventory 3,506.25 4,550.00
Gross profit:
Sales 6,505.00
Less cost of goods sold 4,550.00 1,955.00
Weighted average
Cost of ending inventory:
Cost of goods available for sale 8,056.25
Number of units available for sale 725
Weighted average cost per unit 11.11
Units in ending inventory x 300 3,333.00
Cost of goods sold:
Cost of goods available for sale 8,056.25
Less ending inventory 3,330.00 4,723.25
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Chapter 4 - Inventories
Gross profit:
Sales 6,505.00
Less cost of goods sold 4,723.25 1,781.75
Moving average
Cost of ending inventory:
Inventory, January 1 250 x 10.50 = 2,625.00
Purchase, March 7 200 x 11.00 = 2,200.00
Total 450 x 10.72 = 4,825.00
Sale, May 20 (120 x 10.72 = 1,286.40)
Sale, June 30 ( 55 x 10.72 = 589.60)
Balance 275 x 10.72 = 2,949.00
Purchase, July 15 275 x 11.75 = 3,231.25
Total 550 x 11.24 = 6,180.25
Sale, September 17 (250 x 11.24 = 2,810.00)
Balance 300 x 11.24 = 3,370.25
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Cost P200,000
Net realizable value (204,000 10,000) 194,000
Loss 6,000
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Chapter 4 - Inventories
(2) FIFO retail (exclude the beginning inventory in computing the cost ratio)
337,680/469,000 = 72%
Ending inventory at FIFO cost 72% x P290,000 = P208,800
(a)
Dec. 31, 2015
Loss on Purchase Commitments 50,000
Estimated Liability on Purchase Commitments 50,000
1,000 x (1,200 1,150)
(b)
Dec. 31, 2015
Loss on Purchase Commitments 50,000
Estimated Liability on Purchase Commitments 50,000
(c)
Dec. 31, 2015
Loss on Purchase Commitments 50,000
Estimated Liability on Purchase Commitments 50,000
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Chapter 4 - Inventories
Theory
Problems
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