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05 Activity 2

1. The total balance of inventory using the LCNRV method on an item-by-item basis is P480,000. 2. The proper balance in the Allowance for Inventory Write-down on December 31, 201B is P22,000. 3. The FIFO cost of inventory on December 31, 201A is P236,820. 4. The cost of goods sold in December 201A is P306,180.

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Febe Anne Aglangao
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663 views1 page

05 Activity 2

1. The total balance of inventory using the LCNRV method on an item-by-item basis is P480,000. 2. The proper balance in the Allowance for Inventory Write-down on December 31, 201B is P22,000. 3. The FIFO cost of inventory on December 31, 201A is P236,820. 4. The cost of goods sold in December 201A is P306,180.

Uploaded by

Febe Anne Aglangao
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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BM2008

NAME: DATE: SCORE:

ACTIVITY

Read and analyze the problems. Answer the following items below. Show your computations. (4 items x
5 points)

Yupangco Music Company sells musical instruments. In your audit of the company’s financial statements for
the year ended December 31, 201B, you have gathered the following data concerning inventory.

On December 31, 201A, the balance in Yupangco’s Inventory account was P502,000, and the Allowance for
Inventory Write-down had a balance of P32,000. The relevant inventory cost and market data on December 31,
201B are summarized in the schedule below:

Cost Replacement Sales Price NRV Normal Profit


Cost
Guitars P89,000 P86,000 P91,500 P87,000 P6,400
Ukuleles 94,000 92,000 93,000 85,000 7,440
Keyboards 125,000 135,000 129,000 111,000 11,610
Violins 194,000 114,000 205,000 197,000 20,500
TOTAL P502,000 P427,000 P518,500 P480,000 P45,950

Required:
1. What is the total balance of Inventory using the LCNRV method on an item by item basis? ______________
2. What is the proper balance in the Allowance for Inventory Write-down on December 31, 201B? __________

Prima, Inc. sells electric stoves. It uses perpetual inventory system and allocates cost to inventory on a first-in,
first out (FIFO) basis. The company’s reporting date is December 31. On December 1, 201A, inventory on hand
consisted 350 stoves at P820 each and 43 stoves at 850 each. The following inventory transactions occurred
(all purchase and sales transactions are on account):

201A
Dec 1 Sold 300 stoves for P1,200 each.
3 Five (5) stoves were returned by customers. They had originally cost P820 each and were sold for
P1,200 each.
9 Purchased 55 stoves at P910 each.
10 Purchased 76 stoves at P960 each.
15 Sold 86 stoves for P1,350 each.
17 Returned one (1) damaged stove to the supplier. This stove had been purchased on December 9.
22 Sold 60 stoves for P1,250 each.
26 Purchased 72 stoves at P980 each.

Required:
3. what is the FIFO cost of inventory on December 31, 201A? ____________
4. What is the cost of goods sold in December 201A? ___________

Rubric for scoring:


Criteria Points
Correct accounts and amounts used. 3
Computed final amounts are correct and balanced. 2
TOTAL 5

05 Activity 2 *Property of STI


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