a. Excluded from inventory was carton labeled, “Please accept for credit.

” This carton
contains merchandise costing P15,000 which had been sold to a customer for P25,000.
No entry had been made to the books to reflect the return, but none of the returned
merchandise seemed damaged.

REQUIRED:

Determine the adjusted balance of Inventory.

SOLUTION:

2,348,9
Unadjusted inventory 00
Add (deduct) adjustments:
b) Goods in-transit purchased FOB shipping - not 134,2
included 00
c) Goods in-transit sold FOB destination - included -
d) Goods purchased and received already - included -
85,4
e) Goods purchased and received already - not included 00
(104,3
f) Goods held on consignment - included 80)
(105,2
g) Goods in-transit sold FOB shipping point - included 00)
e) Goods returned by customers, received already - not 15,0
included 00
2,373,9
Adjusted inventory 20

PROBLEM NO. 2 – Computation of adjusted inventory and related accounts

Bulls Company, a manufacturer of small tools, provided the following information from its
accounting records for the year ended December 31, 2015:

Inventory at December 31, 2015

(based on physical count on Dec. 31, 2015) P 980,000
Accounts Payable at December 31, 2015 586,000
Net Sales (sales less sales returns) 10,048,000

Additional information follows:

 a. Goods held on consignment from Chicago to Bulls amounting to P9,000 were included in
the physical count of goods in Bulls’ warehouse on December 31, 2015, and in accounts
payable at December 31, 2015.

b. Retailers were holding P50,000, at cost, of goods on consignment from Bulls, at their
stores on December 31, 2015.

Included in the physical count were goods billed to a customer FOB shipping point on December
31, 2015. These goods had a cost of P31,000 and were billed at P40,000. The shipment was on
Bulls’ loading dock waiting to be picked up by the common carrier