ROSENDO II M.

BISNAR (C101F)
Financial Accounting and Reporting 1
Final Term - Product

1. Amcar Company sells many products. Wham is one of its popular items. Below is an analysis
of the inventory purchases and sales of Wham for the month of March. Amcar Company uses
the periodic inventory system.
Purchases Sales
Units Unit Cost Units Selling Price/Unit
3/1 Beginning inventory 100 Php40
3/3 Purchase 60 Php50
3/4 Sales 70 Php 80
3/10 Purchase 200 Php55
3/16 Sales 80 Php 90
3/19 Sales 60 Php 90
3/25 Sales 40 Php 90
3/30 Purchase 40 Php60

Instructions
(a) Using the FIFO assumption, calculate the amount charged to cost of goods sold for March.
(Show computations)
(b) Using the weighted average method, calculate the amount assigned to the inventory on hand
on March 31. (Show computations)
(c) Using the LIFO assumption, calculate the amount assigned to the inventory on hand on
March 31. (Show computations)

ANSWER

(a) 3/1 100 (40) = 4,000

3/3 60 (50) = 3,000
1/10 90 (55) = 4,950

(b) 20,400/400 = 51
400-250 = 150
51x150 = 17,650

(c) 3/1 100 40 = 4,000

3/3 50 50 = 2,500
150 units
6,500 = ENDING INVENTORY

2. Concord Company uses the periodic inventory system to account for inventories. Information
related to Concord Company's inventory at October 31 is given below:
October 1 Beginning inventory 400 units @ $10.00 = $ 4,000
8 Purchase 800 units @ $10.40 = 8,320
16 Purchase 600 units @ $10.80 = 6,480
24 Purchase 200 units @ $11.60 = 2,320
Total units and cost 2,000 units $21,120

Instructions
1. Show computations to value the ending inventory using the FIFO cost assumption if
550 units remain on hand at October 31.
2. Show computations to value the ending inventory using the weighted-average cost
method if 550 units remain on hand at October 31.
3. Show computations to value the ending inventory using the LIFO cost assumption if
550 units remain on hand at October 31.

ANSWER

1. 10/24 200 units 11.60 = 2,320

2. 10/16 350 units 10.80 = 3,780

550 units = 6,100

3. 10/1 400 10 = 4,000

10/8 150 10.40 = 1,560
550 units = 5,560

3. Nuzelt Company is preparing the annual financial statements dated December 31, 2008.
Information about inventory stocked for regular sale follows:

Quantity Unit Cost Replacement Cost

Item on Hand When Acquired (market) at year end
A 50 Php20 Php19
B 100 45 45
C 20 60 62
D 40 40 37

Instructions
Compute the valuation for the December 31, 2008, inventory using the lower-of-cost-or-market
basis.

4. Dryer Company reported net income of $60,000 in 2008 and $80,000 in 2009. However, ending
inventory was overstated by $5,000 in 2008.

Instructions
Compute the correct net income for Dryer Company for 2008 and 2009.

ANSWER
2008 adjusted net income = (60,000-5,000 = 55,000)
2009 adjusted net income = (80,000+5,000 = 85,000)