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INTACC1 Inventory Problems

The document provides data on inventory counts and costs for Aman Company and Brilliant Company. It also includes details of a sales transaction for Hungary Company. Aman Company's inventory includes items in various stages of the supply chain. Brilliant Company incurred various purchase and non-purchase costs. Hungary Company sold goods with trade discounts, shipping terms, and later received a sales return.

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453 views3 pages

INTACC1 Inventory Problems

The document provides data on inventory counts and costs for Aman Company and Brilliant Company. It also includes details of a sales transaction for Hungary Company. Aman Company's inventory includes items in various stages of the supply chain. Brilliant Company incurred various purchase and non-purchase costs. Hungary Company sold goods with trade discounts, shipping terms, and later received a sales return.

Uploaded by

Butterfly 0719
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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1.

Aman Company provided the following data with respect to its inventory:

Items counted in the bodega

Items included in the count specifically segregated per sale contract

items in receiving department, returned by customer, in good condition

Items ordered and in the receiving deparment, invoice not received

Items ordered, invoice received but goods not received. Freight is on account of seller.

Items shipped today, invoice mailed, FOB shipping point

Items shipped today, invoice mailed, FOB destination

Items currently being used for window display

Items on counter for sale

Items in receiving department, refused by Aman Company because of damage

Items included in count, damaged and unsalable

Items in the shipping department

What is the correct amount of inventory?

a. 5,700,000

b. 6,000,000

c. 5,800,000

d. 5,150,000

Solution 16-1 Answer a

Items counted in the bodega

Items included in the count specifically segregated per sale contract

Items returned by customer

Items ordered and in receiving deparment

Items shipped today, FOB destination

Items for display

Items on counter for sale

Damaged and unsalable items included in count

Items in the shipping department

2. Brilliant Company incurred the following costs during the current year:
Cost of purchases based on vendors' invoices

Trade discounts on purchases already deducted from vendors' invoices

Import duties

Freight and insurance on purchases

Other handling costs relating to imports

Salaries of accounting department

Brokerage commission paid to agents for arranging imports

Sales commission paid to sales agents

After-sales warranty costs

What is the total cost of the purchases?

a. 5,700,000

b. 6,100,000

c. 6,700,000

d. 6,500,000

Solution 16-4 Answer c

Cost of purchases 5,000,000

Import duties 400,000

Freight and insurance 1,000,000

Other handling costs 100,000

Brokerage commission 200,000

Total cost of purchases 6,700,000

3. Hungary Company uses the net method of accounting for cash discounts. In one of its
transactions on December 15, 2011,

Hungary sold merchandise with a list price of P2,000,000 to a customer who was given a trade discounts
of 20% and 15%.

Credit terms were 2/10,n/30.

The goods were shipped FOB destination, freight collect.

Total freight charge paid by the customer returned damaged goods originally billed at P60,000.

What is the net realizable value of this account receivable on December 31, 2011?
a. 1,280,000

b. 1,300,000

c. 1,170,000

d. 1,320,000

There is no cash discount because the discount period of 10 days has already expired.

Solution 16-17 Answer a

List price 2,000,000

Trade discount (20% x 2,000,000) (400,000)

Balance 1,600,000

Trade discount (15% x 1,600,000) (240,000)

Invoice price 1,360,000

Sales return (60,000)

Freight paid by customer (20,000)

Net realizable value of AR 1,280,000

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