Problem 34 (AICPA Adapted)

Seafood Company commenced operations during the year as large importer and exporter of
seafood. The imports were all from one country overseas. The entity reported the following
data:

Purchases during the year 12,000,000

Shipping costs from overseas 1,500,000
Shipping costs to export customers 1,000,000
Inventory at year-end 3,000,000

What amount of shipping costs should be included in the year-end inventory valuation?

a. 250,000
b. 625,000
c. 375,000
d. 0

Problem 35 (AICPA Adapted)

On June 1, 2016, Pitt Company sold merchandise with a list price of P5,000,000 to Burr on
account. Pitt allowed trade discounts of 30% and 20%.

Credit items were 2/10, n/30 and the sale was made FOB shipping point. Pitt prepaid P200,000
of delivery costs for Burr as an accommodation.

1. What amount should be reported as sales revenue?

a. 5,000,000
b. 2,800,000
c. 3,500,000
d. 2,500,000

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2. On June 11, 2016, what amount was received by Pitt from Burr as remittance in full?

a. 2,744,000
b. 2,940,000
c. 2,944,000
d. 3,140,000
Problem 36 (AICPA Adapted)

Kew Company reported accounts payable on December 31,2016 at P2,200,000 before

considering the following data:

 Goods shipped to Kew F.O.B. shipping point on December 22, 2016, were lost in
transit. The invoice cost of P40,000 was not recorded by Kew. On January 7,2017, Kew
filed a P40,000 claim against the common carrier.

 On December 27, 2016, a vendor authorized Kew to return, for full credit, goods
shipped and billed at P70,000 on December 3, 2016. The returned goods were shipped
by Kew on December 28, 2016. A P70,000 credit memo was ,received and recorded by
Kew on January 5, 2017.

 On December 31, 2016, Kew has a P500,000 debit balance in accounts payable to Ross,
a supplier, resulting from a P500,000 advance payment for goods to be manufactured.

What amount should be reported as accounts payable on December 31, 2016?

a. 2,170,000
b. 2,680,000
c. 2,730,000
d. 2,670,000

Problem 37 (AICPA Adapted)

Lyle Company is preparing financial statements for the year ended December 31, 2016.
Accounts payable amounted to P360,000 before any necessary year-end adjustment related to
the following:

 On December 31, 2016, Lyle has a P50,000 debit balance in accounts payable to Reese, a
supplier, resulting from a P50,000 advance payment for goods to be manufactured.

 Checks in the amount of P100,000 were written to vendors and recorded on December
20, 2016. The checks were mailed on January 5, 2017.

What amount should be reported as accounts payable on December 31, 2016?

a. 510,000
b. 410,000
c. 310,000
d. 210,000
Problem 30 (AICPA Adapted)

Bakun Company began operations late in 2015. For the first quarter ended March 31, 2016, the
entity provided the following information:

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Total merchandise purchased through March 15, 2016
recorded at net 4,900,000
Merchandise inventory on January 1, 2016,
At selling price 1,500,000

All merchandise was acquired on credit and no payments have been made on accounts payable
since the inception of the entity.

All merchandise is marked to sell at 50% above invoice cost before time discounts of 2/10,
n/30. No sales were made in 2016.

What amount of cash is required to eliminate the current balance in accounts payable?

a. 6,000,000
b. 5,900,000
c. 6,400,000
d. 5,750,000

Problem 31 (IAA)

Jayson Company used the perpetual system. The following information has been extracted
from the records about one product:

Units Unit cost Total cost

Jan. 1 Beginning balance 8,000 70.00 560,000

6 Purchase 3,000 70.50 211,500
Feb. 5 Sale 10,000
Mar. 5 Purchase 11,000 73.50 808,500
Mar. 8 Purchase return 800 73.50 58,800
Apr. 10 Sale 7,000
Apr. 30 Sale return 300

If the FIFO cost flow method is used, What is the cost of the inventory on April 30?

a. 330,750
b. 315,000
 c. 433,876
d. 329,360

Problem 32 (IAA)

Mildred Company is a wholesaler of office supplies. The FIFO periodic inventory is used. The
entity reported the following activity for inventory of calculators during the month of August:

Units Cost

August 1 Inventory 20,000 36.00

7 Purchase 30,000 37.20
12 Sale 36,000
21 Purchase 48,000 38.00
22 Sale 38,000
29 Purchase 16,000 38.60

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What is the ending inventory on August 31?

a. 1,500,800
b. 1,501,600
c. 1,522,880
d. 1,529,600

Problem 33 (IAA)

Hilltop Company sells a new product. During a move to a new location, the inventory records
for the product were misplaced. The entity has been able to gather some information from the
purchases and sales records. The July purchases are as follows:

Quantity Unit cost Total cost

July 5 10,000 65 650,000

9 12,000 63 756,000
12 15,000 60 900,000
25 14,000 62 868,000

51,000 3,174,000