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Inventory Estimation
Inventory Estimation
P6,000,000
20,000,000
30,000,000
2004
P
0
4,300,000
230,600
3,940,000
80,000
2005
P1,020,000
3,460,000
323,000
4,180,000
100,000
On January 1, 2005, the Corporations pricing policy was changed so that the gross
profit rate would be three percentage points higher than the one earned in 2004.
Salvaged undamaged merchandise was marked to sell at P120,000 while damaged
merchandise was marked to sell at P80,000 had an estimated realizable value of
P18,000.
How much is the inventory loss due to fire?
a. P918,200
b. P947,000
c. P856,200
d. P824,600
January 1, 2005
P 60,000
200,000
280,000
June 1, 2005
P120,000
240,000
Sales from January 1 to May 31, were P546,750. Purchases of raw materials were
P200,000 and freight on purchases, P30,000. Direct labor during the period was
P160,000. It was agreed with insurance adjusters than an average gross profit rate of
35% based on cost be used and that direct labor cost was 160% of factory overhead.
The work in process inventory destroyed as computed by the adjuster
a. P314,612
c. P185,000
b. P366,000
d. P265,000
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4. Tublay uses the retail inventory method to approximate the lower of average cost or
market. The following information is available for the current year:
Cost
P 1,300,000
18,000,000
400,000
600,000
300,000
400,000
Beginning inventory
Purchases
Freight in
Purchase returns
Purchase allowances
Departmental transfer in
Net markups
Net markdowns
Sales
Sales discounts
Employee discounts
Retail
P 2,600,000
29,200,000
1,000,000
600,000
600,000
2,000,000
24,400,000
200,000
600,000
What should be reported as the estimated cost of inventory at the end of the current
year?
a. P3,120,000
c. P3,000,000
b. P3,200,000
d. P3,840,000
5. Trinidad Company uses the average cost retail method to estimate its inventory. Data
relating to the inventory at December 31, 2005 are:
Inventory, January 1
Purchases
Net markups
Net markdowns
Sales
Estimated normal shoplifting losses
Estimated normal shrinkage is 5% of sales
Cost
P 2,000,000
10,600,000
Retail
P3,000,000
14,000,000
1,600,000
600,000
12,000,000
400,000
Trinidads cost of goods sold for the year ended December 31, 2004 is
a. P9,100,000
c. P8,400,000
b. P8,680,000
d. P7,700,000
6. Mankayan Company uses the first-in, first-out retail method of inventory valuation. The
following information is available:
Cost
P 2,500,000
13,500,000
Beginning inventory
Purchases
Net markups
Net markdowns
Sales
Retail
4,000,000
16,000,000
3,000,000
1,000,000
15,000,000