1.

AVENGERS Company incurred the following costs:

Materials P700, 000

Storage Costs of Finished Goods 180, 000
Delivery to Customers 40, 000
Irrecoverable Purchase Taxes 60, 000

At what amount should the inventory be measured?

a. P 880, 000
b. P 760, 000
c. P 980, 000
d. P 940, 000

2. DALISAY Company had the following transactions during December 2018:

Inventory shipped on consignment to KARA Company 1, 800, 000

Freight paid by DALISAY 90, 000
Inventory received on consignment from MIA Company 1, 200, 000
Freight paid by MIA 50, 000

No sales of consigned goods were made in December 2018.

What amount should be included in inventory on December 31, 2018?

a. 1,200,000
b. 1,250,000
c. 1,800,000
d. 1,890,000

3. CASSIE Company shipped inventory on consignment to MARGA Company with

original cost of P500,000. Marga paid P12,000 for advertising that was reimbursable
from Cassie.

At the end of the year, 40% of the inventory was sold for P320,000. The agreement stated
that a commission of 10% will be provided to Marga for all sales.

What amount should be reported as net income from the consignment?

a. 100,000
b. 120,000
c. 76,000
d. 0

4. On June 1, 2018, ROMINA Company sold merchandise with a list price of P5,000,000 to
DANIELLA Company on account. Romina allowed trade discounts of 30% and 20%.

Credit terms were 2/10, n/30 and the sale was made FOB Shipping Point. Romina
prepared P200,000 of delivery costs for Daniella as an accommodation.
 A. What amount should be reported as sales revenue?
a. P5,000,000
b. P2,800,000
c. P3,500,000
d. P2,500.000

B. On June 11, 2018, what amount was received by Romina from Daniella as remittance
in full?
a. 2,744,000
b. 2,940,000
c. 2,944,000
d. 3,140,000

5. SAHAYA Company incurred the following costs in relation to as certain product:

Direct Materials and Labor 180,000

Variable Production Overhead 25,000
Factory Administrative Costs 15,000
Fixed Production Costs 20,000

What is the correct measurement of the product?

a. 205,000
b. 225,000
c. 195,000
d. 240,000

6. Dracarys Company provided the following information for the current year:
Units Unit cost Total cost
January 1 inventory on hand 200 1,500 300,000
April 3 purchase 300 1,750 525,000
October 1 purchase 500 2,000 1,000,000

The entity sold 400 units on June 25 and 400 on December 10. What is the weighted
average cost of the inventory at year-end?
a. 350,000
b. 400,000
c. 730,000
d. 365,000

7. Snow Company reported a physical inventory on December 31, 2018 with a cost of
P4,000,000. The following items were excluded from the count:
 A special machine, fabricated to order for a customer costing P400,000, was finished
and specifically segregated on December 31, 2018
The customer was billed on that date and the machine excluded from inventory
although it was shipped on January 4, 2019
  Merchandise costing P50,000 shipped by a vendor FOB seller on December 28, 2018
and received by Jon Company on January 10, 2019

What is the correct inventory on December 31, 2018?

a. 4,000,000
b. 4,400,000
c. 4,450,000
d. 4,050,000

8. Meme Company reported accounts payable on December 31, 2018 at P2,000,000 before
considering the following transactions:
 Goods shipped to Meme Company, FOB shipping point on December 20, 2018, from
a vendor were lost in transit. The invoice price was P100,000. On January 5, 2019,
Meme Company filed at P100,000 claim against the common carrier.
 On December 27, 2018, a vendor authorized Meme Company to return, for full credit,
goods shipped and billed at P50,000 on December 2, 2018. The returned goods were
shipped by Meme Company on December 27, 2018. A P50,000 credit memo was
received and recorded by Meme Company on January 6, 2019.

On December 31, 2018, what amount should be reported as accounts payable?

a. 2,250,000
b. 2,150,000
c. 2,050,000
d. 2,300,000
 ANSWERS WITH SOLUTIONS:

1. ANSWER: B

MATERIALS 700,000
IRRECOVERABLE PURCHASE TAXES 60,000

TOTAL COST OF INVENTORY 760,000

2. ANSWER: D
Inventory shipped on consignment to KARA 1,800,000
Freight paid by Dalisay 90,000

TOTAL COST OF CONSIGNED INVENTORY 1,890,000

3. ANSWER: C
Consignment Sales 320,000
Cost of goods sold (40% x 500,000) (200,000)
Advertising ( 12,000)
Commission (10% x 320,000) ( 32,000)

NET INCOME FROM CONSIGNMENT 76,000

4. QUESTION A-ANSWER: B
QUESTION B-ANSWER: C
List Price 5,000,000
Trade Discounts
30% x 5,000,000 (1,500,000)
3,500,000
20% x 3,500,000 ( 700,000)

Invoice Price – SALES REVENUE 2,800,000

Cash Discounts (2% x 2,800,000) ( 56,000)
Net Amount 2,744,000
Add: Reimbursement of delivery cost 200,000
TOTAL REMITTANCE FROM DANIELLA 2,944,000

5. ANSWER: D
Direct Materials and Labor 180,000
 Variable Production Overhead 25,000
Factory Administrative Costs 15,000
Fixed Production Costs 20,000

TOTAL COST OF THE PRODUCT 240,000

6. ANSWER: D
Units Total cost
January 1 200 300,000
April 3 300 525,000
October 1 500 1,000,000
Total 1,000 1,825,000
Less: Sales(400+400) 800
Ending inventory 200

Average unit cost (1,825,000/1000) = 1,825

Weighted average cost of the inventory (1,825 x 200) = 365,000

7. ANSWER: D
Physical inventory 4,000,000
Merchandise inventory FOB SP 50,000
Correct inventory 4,050,000

8. ANSWER: C
Accounts payable per book 2,000,000
Goods lost in transit, FOB SP 100,000
Purchase return (50,000)
Adjusted balance 2,050,000