Name:_____________________________________________

1. MNO Co. purchased goods with invoice price of P1,000 on account on December 27, 2018. The
related shipping costs amounted to P10. The seller shipped the goods on December 31, 2018.
The company received the goods on January 2, 2019 and settled the account on January 5, 2019.

Record the pertinent entries in the books of MNO Co under different terms of purchase:
a. FOB Shipping Point, Freight Collect
b. FOB Destination, Freight Prepaid
c. FOB Shipping Point, Freight Prepaid
d. FOB Destination, Freight Collect

2. DEF Co provided you the following information for the purpose of determining the amount of its
inventory as of December 31, 2018.

Goods located at the warehouse (physical count) 3,800,000

Goods located at the sales department (at cost) 13,600,000
Goods in transit purchased FOB destination 1,600,000
Goods in transit purchased FOB Shipping point 2,100,000
Freight incurred under “freight prepaid” for the goods
Purchased under FOB Shipping point 60,000
Goods held on consignment from XYZ Inc. 1,800,000

How much is the total inventory on December 31, 2018.

3. On December 31, 2018, ABC Co has a balance of P160,000 in its inventory account determined
through physical count and a balance of P100,000 in its accounts payable accounts. The
balances were determined before any necessary adjustments for the following:
a. Merchandise costing P10,000, shipped FOB shipping point from a vendor on December 30,
2018, was received and recorded on January 5, 2019.
b. A package containing a product costing P50,000 was standing in the shipping area when the
physical inventory was conducted. This was not included in the inventory because it was
marked “Hold for Shipping Instructions”. The sale order was dated December 17 but the
packaged was shipped and the customer was billed on January 3, 2019.
c. Goods in shipping area were included in inventory because shipment was not made until
January 4, 2019. The goods, billed to the customer FOB shipping point on December 30,
2018, had a cost of P20,000.
d. Goods shipped FOB destination on December 27, 2018, from a vendor to ABC Co were
received on January 6, 2019. The invoice price cost P30,000 was recorded on December 31,
2018 and included in the count was “goods in transit”.

Determine the adjusted balances of inventory and accounts payable as of December 31, 2018.
4. The records of ABC Co shows the following:
a. Goods sold on an installment basis to XYZ, Inc., title to the goods
Is retained by ABC Co until payment is made P750,000
b. Goods sold to Alpha Co for which ABC Co has signed an agreement
to repurchase the goods sold at a set price that covers all costs
related to the inventory 680,000
c. Goods sold where large returns are predictable 270,000
d. Goods received from Beta Co for which an agreement was signed
requiring ABC Co to replace such goods in the future 580,000

How much is included as part of inventory?

5. The following are among the transactions of ABC Co during the year
a. Purchased goods costing P10,000 from XYZ, Inc.. Billing was received although delivery was
delayed per request of ABC Co. The goods purchased were segregated and ready for
delivery on demand.
b. Purchased goods costing P25,000 from Alpha world on a lay away sales agreement. The
goods were not yet delivered until after ABC makes a final payment on the purchase price.
ABC Co. made total payments of P10 during the year.

How much of the goods purchased above will be included in ABC’s year-end inventory?

6. ABC Co, a VAT taxpayer, imported goods from a foreign supplier. Costs incurred by ABC include
the following:
Purchase price P100
Import duties 10
VAT 13
Transportation and Handling costs 5
Commission to broker 2
130

How much is the cost of purchase of the imported goods?

7. An entity purchases inventory with a list price of 10,000 on account under credit terms 20%,
10%, 2/10, n/30.

Record the entry under the gross method and net method supposed the entity pays it within
discount period and payment is beyond discount period.

8. ABC Co is a wholesaler of guitar picks. The activity of product “Pick X” for August is shown
below:

Date Transaction Units Unit Cost Total Cost

Aug 1 Inventory 2,000 P36.00 P72,000
7 Purchase 3,000 37.20 111,600
12 Sales 4,200
 13 Sales Return 600
21 Purchases 4,800 38.00 182,400
22 Sales 3,800
29 Purchase 1,900 38.60 73,340
30 Purchase Return 300 38.60 (11,580)
Total Goods Available for Sale P427,760

Compute for (a) ending inventory and (b) Cost of goods sold under the following cost formulas:
a. FIFO-Periodic
b. FIFO-Perpetual
c. Weighted Average-Periodic
d. Weighted Average – Perpetual