DLSU ACYCST1 ONLINE LEARNING, TERM 3 AY 2019-2020

INSTRUCTOR-LED INDIVIDUAL ACTIVITY: ACCOUNITNG FOR MATERIALS (ADAPTED)

EXERCISE 1
Sunny Company received quotations from two entities for an item of merchandise as follows:
From Company X: List price P500,000, less a trade discount of 20-10-10, FOB shipping point, 2/10, n/30.
From Company Y: List price P500,000, less a trade discount of 35, FOB shipping point, 2/10, n/30.

Required:
For each quotation, compute the invoice amount and the amount to be paid by the buyer within the discount
period.

EXERCISE 2
MB Company regularly buys merchandise from LJ Suppliers and is allowed a trade discount of 20/10/10
from the list price. For the month of September, MB Company purchased merchandise with a list price of
P200,000 and terms of 3/10, n/30.

Compute the following:

1. The amount debited to Materials if purchases recorded at gross.
2. The amount debited to Materials if the purchases recorded at net.

EXERCISE 3
On June 1, Morales Corporation purchase materials listed at P700,000 while receiving a trade discounts of
10%, and 5%, while the credit term is 5/10, n/30.

Required:
Journal entries to record the purchase and payments assuming
a. Full payment is made on June 9.
b. Full payment is made on June 30 using the following:
1. Gross Method
2. Net Method

EXERCISE 4
An invoice for A, B, and C is received from Harp Corp. Invoice totals are A - P11,250; B - P13,500; and C
- P15,750. The freight charges on this shipment of 18,000 pounds total P1,620. Weights for the respective
materials are 4,500, 6,000, and 7,500 pounds respectively.

Compute the following:

1. Entry to record the purchase of materials and freight using:
a. Direct charging method.
b. Indirect charging method.
2. Cost per pound to be entered on the stock cards for each material based on cost.
3. Cost per pound to be entered on the stock cards for each material, based on shipping weight.

EXERCISE 5
Winter Company is a manufacturer of golf clothing. During the month, the company cut and assembled
8,000 golf jackets. One hundred of the jackets did not meet specifications and were considered “seconds”.
Seconds are sold for P 80.00 per jacket (spoiled), whereas first quality jackets sell for P400. During the

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
th
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15 ed.). Pearson Education, Inc.
DLSU ACYCST1 ONLINE LEARNING, TERM 3 AY 2019-2020

INSTRUCTOR-LED INDIVIDUAL ACTIVITY: ACCOUNITNG FOR MATERIALS (ADAPTED)

month, Work-In Process was charged for a total of P1,620,000: P460,000 for materials, P580,000 for labor,
and P580,000 for factory overhead.

Required:
Entries required for each of the following conditions:
1. Loss due to spoiled work is spread over all jobs.
2. Loss due to spoiled work is charge to a specific job.

EXERCISE 6
Yu Co. manufactures gold carts and other recreational equipment. One order for NG Corporation for 2,000
carts showed the following costs per unit: direct materials - P40: direct labor P20: and factory overhead
applied at 140% of direct labor cost if defective work (rework) is charged to a specific job and 150% if
defective work is charged to all jobs.

Final inspection revealed that wheels were assembled with improper bearings. The wheels were
disassembled and the proper bearings inserted. The cost of correcting each defective cart consists of P2
added cost for bearings, P4 for labor and factory overhead at the predetermined rate.

Required:
A. Prepare journal entries to record correction of the defective units and transfer of the work in process
to finished goods if:
1. Charge to specific job.
2. Charge to all production.
B. Compute the cost per unit of finished goods if:
1. The NG is to be charged with the cost of defective units.
2. The cost of correcting the defective units is not charged to NG.

Deleon, Jr. M., & Deleon, N. (2016). Cost Accounting, (2016 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
Guerrero, P. (2018). Cost Accounting: Principles and Procedural Application, (2018 ed.). GIC Enterprises & Co., Inc., Manila, Philippines.
th
Horngren, C., Datar, S. & Rajan, M. (2015). Cost Accounting: A Managerial Emphasis, (15 ed.). Pearson Education, Inc.