HOMETOWN CHA-CHA DABARKADS employs the lower of cost of net realizable value in the measurement of inventory. OnDecember 31, 2020, the ending inventory was reported as follows:Inventory (20,000 @ P21)P420,000Less: Allowance for inventory writedown60,000Net Realizable ValueP360,000Sales and purchases for 2021 are as follows:PurchasesSalesQuarterUnitsUnitCostTotalCostUnitsUnitPriceTotalPrice1st30,000P18P540,000 15,000P19P285,0002nd25,00020500,000 30,00023690,0003rd22,00021462,000 25,00025625,0004th35,00019665,000 20,00024480,000The company uses weighted average method in determining inventory cost. On December 31, 2021. The net realizable value per unitis P19.REQUIRED1. Compute the cost of inventory on December 31, 2021. Note: Round off the weighted average unit cost to two decimal places.2. Compute the gain/(loss) on inventory writedown. Note: If the amount is a loss, place a hyphen (-) before the figure e.g. -1,2343. Compute the cost of goods sold.每

In case of weighted average method, after each purchase a weighted average rate is calculated from…

1. Compute the cost of inventory on December 31, 2021. Note: Round off the weighted average unit cost to two decimal places. 2. Compute the gain/(loss) on inventory writedown. Note: If the amount is a loss, place a hyphen (-) before the figure e.g. -1,234 3. Compute the cost of goods sold.

1. Compute the cost of inventory on December 31, 2021. Note: Round off the weighted average unit cost to two decimal places. 2. Compute the gain/(loss) on inventory writedown. Note: If the amount is a loss, place a hyphen (-) before the figure e.g. -1,234 3. Compute the cost of goods sold.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter7: Inventories: Cost Measurement And Flow Assumptions

Section: Chapter Questions

Problem 13P: Webster Company adopted do liar-value LIFO on January 1, 2019. Webster produces three products: X,...

See similar textbooks

Related questions

Q: Charlene Company uses the average cost retail method to estimate its inventory. Data relating to the…

A: Cost of goods sold is the total cost incurred to produce goods during the particular year. It is…

Q: Bonita, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years…

A: Date Inventory atEnd-of-year Prices Price Index Inventory at Base-year Prices Changefrom Prior Year…

Q: Lamas has the following products in inventory at the year end: Selling Price P 65 P 23 P 25 Selling…

A: As per accounting standard 2, all inventories in the business should be valued at lower of cost or…

Q: Sparrow Company uses the retail inventory method to estimate ending inventory and cost of goods…

A: The monetary value connected with the products in inventory at the conclusion of an accounting…

Q: The following data are available for Sellco for the fiscal year ended on January 31, 2020: Sales…

A: Ending units=Beginning units+Purchases -Units sold=260+340+440+190-800=430 units

Q: Hogan Industries had the following inventory transactions occur during 2022: Units Cost/unit Feb. 1,…

A: Lets understand the basics. Gross profit is a profit generated from the sales. Gross profit = Sales…

Q: Andover Stores uses the average cost retail method to estimate its ending inventory. Information as…

A: Estimated ending inventory is the amount of inventory that an entity might have at the end of the…

Q: Given the following data for Al-Madar co. for 2021: Inventory at Cost (31/12/2021) 22000 Inventory…

A: Cost of goods sold means the cost incurred on the goods which has been sold out. This figure can be…

Q: Uki Company had the following transactions for inventory during 2020: Units Unit Cost Unit…

Q: WHAT IS THE WEIGHTED-AVERAGE COST PER UNIT BASE OFF THE CHART?? You are provided with the…

A: Weighted average unit cost of inventory means on an average what will be unit cost of inventory.…

Q: Using the LIFO inventory costing method compute ending inventory and cost of goods sold from the…

A: SOLUTION- THERE ARE THREE TYPES OF METHODS- FIFO , LIFO AND WEIGHTED AVERAGE METHOD . ENDING…

Q: Arna, Inc. uses the dollar-value LIFO method of computing its inventory. Data for the past 3 years…

A: LIFO Method: It is a method of inventory valuation where the inventory purchased last will be sold…

Q: ALOHA Company determined the following information for an inventory at year end. Historical Cost P…

A: Inventory at year end = Lower of Cost or Net realizable value where, Net realizable value =…

Q: Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory…

A: The inventory is the current assets of the company.

Q: Pharoah Company had the following records: 2022 2021 Ending inventory $ 42000 $ 30000…

A: Average inventory = Beginning inventory + ending inventory) / 2 = (42000 + 30000) = $36,000

Q: On January 2020, Roel Corp. Has the following inventory purchases…

A: The inventory can be valued using various methods as FIFO, LIFO and weighted average method.

Q: Rizza Co. has an average age of inventory equal to 25 days. If its end of year inventory level is…

A: Average age of inventory = 25 days Inventory level = P8,500

Q: Listed below is the inventory, purchases and sales for the month of July 2021: Units RM per unit…

A: Under perpetual inventory system cost of goods sold is recorded simultaneously whereas under…

Q: Use the weighted-average (AVG) cost allocation method, with perpetual inventory updating, to…

A: Formula: Gross margin = sales - cost of goods sold. Deduction of cost of goods sold from sales value…

Q: What is the amount of inventory on March 31 using the moving average cost flow technique? During…

Q: Using the LIFO inventory costing method compute ending inventory and cost of goods sold from the…

A: LIFO method assumes that the last unit to arrive in inventory is sold first. The older inventory,…

Q: A company has the following information available that was used to report inventory using the…

A: Most of ending inventory is to be reported at cost index 1.06

Q: Whispering, Inc, uses the dollar-value LIFO method of computing its inventory. Data for the past 3…

A: The inventory valuation method used to evaluate the closing inventory and cost of goods sold on the…

Q: Kumar Inc. uses LIFO inventory costing. At January 1, 2020, inventory was $214,000 at both cost and…

Q: Presented below is information related to Crane Company. Date Ending Inventory (End-of-Year…

A: Date Ending Inventory(End-of-Year Prices) PriceIndex Inventory at base year price Change from the…

Q: Use the weighted-average (AVG) cost allocation method, with perpetual inventory updating, to…

A: (a) Calculate the sales revenue.

Q: The inventory records of Machiatto Company in January 2020 show the following informations Balance…

A: FIFO is a method of valuing the inventories in which the goods purchased first are sold on a…

Q: Cullumber uses the conventional retail method to determine its ending inventory at cost. Assume the…

A: Cost to retail ratio = (Merchandise available for sale at cost / Merchandise available for sale at…

Q: During 2021, a company sells 25 units of inventory. The company has the following inventory purchase…

A: Average cost per unit = Cost of goods available for sales / Total units available for sale = $1,780…

Q: On balance day, a physical inventory count and cost was $10,250, and the market value of inventory…

A: Note: As per relevant Standard, inventory is valued at lower of cost or Net relizable value. where,…

Q: Use the following information relating to Clover Company to calculate (a) the inventory turnover…

A: Inventory turnover = Cost of goods sold / Average inventory where, Average inventory = (Beginning…

Q: Given the following, calculate the estimated cost of ending inventory using the gross profit method.…

A: Ending inventory = Cost of goods available for sale - Cost of goods sold Cost of goods sold = Sales…

Q: Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and…

A: FIFO METHOD:— It stands For First in First Out. In this Method Firstly Beginning Inventory is used…

Q: Using Perpetual Inventory, identify cost of goods sold expense for Oct 2021 # Units Cost Sale price…

A: Perpetual Inventory System is a system of recording stores balances after every receipt and issue…

Q: The inventory of LA VIDA Company at the end of the year is to be recorded at the lower of cost and…

A: Net realizable value means the amount that could be received after deducted all incidental expenses…

Q: UMET's Stores had the following inventory transactions in 2020: Transaction…

A: Inventory: It refers to the items held by an organization which were in various forms like raw…

Q: Given the following data for AI-Madar co. for 2021: Inventory at Cost (31/12/2021) Inventory at NRV…

A: Cost of goods sold = sales - Gross profit

Q: Consider the following information: Units Cost per unit Total costs Goods in inventory at…

A: Under Weighted average cost method, value of ending inventory and cost of goods sold is calculated…

Q: Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory…

A: Aa per accounting standard, inventory should be valued at lower of cost or market value.

Q: During 2020, Liberty Company has the following inventory transactions. Date Transaction Units…

A: LIFO: In Last-in-first-out it is assumed that the last purchased item will be sold first. So, the…

Q: Cinco Company determined the following information for an inventory at year-end: P2,000,000…

A: Inventory is reported at lower of historical cost and net realizable value. Net realizable value is…

Q: The following data are available for Sellco for the fiscal year ended on January 31, 2020: Sales 800…

A: Inventory valuation is based on the flow of inventory used by the organization. There are several…

Q: Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory…

A: Rate after profit=100%-Normal profit rate=100%-20%=80%

Q: 1. How much should be the inventory to be reported in the year-end statement of financial position?…

A: Inventory must be recorded at a lower of cost or the net realizable value. Under LCNRV, we…

Q: Assume the perpetual inventory system is used unless stated otherwise. Round all numbers to the…

A: Gross profit = Sales Revenue - Cost of Goods Sold Gross profit percentage = Gross Profit / Sales…

Q: acme company had the following records: 2022…

A: The average days in inventory is calculated as average inventory divided by cost of goods sold and…

Q: Tatum Company has four products in its inventory. Information about the December 31, 2021, inventory…

A: The lower cost or net realizable method state that the inventory should be recorded at the lowest…

Question

HOMETOWN CHA-CHA DABARKADS employs the lower of cost of net realizable value in the measurement of inventory. On
December 31, 2020, the ending inventory was reported as follows:
Inventory (20,000 @ P21)
P420,000
Less: Allowance for inventory writedown
60,000
Net Realizable Value
P360,000
Sales and purchases for 2021 are as follows:
Purchases
Sales
Quarter
Units
UnitCost
TotalCost
Units
UnitPrice
TotalPrice
1st
30,000
P18
P540,000 15,000
P19
P285,000
2nd
25,000
20
500,000 30,000
23
690,000
3rd
22,000
21
462,000 25,000
25
625,000
4th
35,000
19
665,000 20,000
24
480,000
The company uses weighted average method in determining inventory cost. On December 31, 2021. The net realizable value per unit
is P19.
REQUIRED
1. Compute the cost of inventory on December 31, 2021. Note: Round off the weighted average unit cost to two decimal places.
2. Compute the gain/(loss) on inventory writedown. Note: If the amount is a loss, place a hyphen (-) before the figure e.g. -1,234
3. Compute the cost of goods sold.
每

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the direct method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
Refer to the information provided in RE8-4. If Paul Corporations inventory at January 1, 2019, had a cost and net realizable value of 300,000, prepare the journal entry to record the reductions to NRV for Paul Corporation assuming that Paul uses a periodic inventory system and the allowance method. Paul Corporation uses FIFO and reports the following inventory information: Assuming Paul uses a perpetual inventory system and the direct method, prepare the journal entry to record the write-down of inventory.
Webster Company adopted do liar-value LIFO on January 1, 2019. Webster produces three products: X, Y, and Z. Websters beginning inventory consisted of the following: During 2019, Webster had the following purchases and sales: Required: 1. Compute the LIFO cost of the ending inventory assuming Webster uses a single inventory pool. Round cost index to 4 decimal places. 2. Compute the LIFO cost of the ending inventory assuming Webster uses three inventory pools. Round cost indexes to 4 decimal places.
Borys Companys periodic inventory at December 31, 2019, is understated by 10,000, but purchases are correct. Johnson correctly values its 2020 ending inventory. What is the effect of this error on Boryss 2019 and 2020 financial statements?
The cost of the inventory on January 31, 2019, under the FIFO method is: a. 400 b. 2,700 c. 3,100 d. 3,200
Company Elmira reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 32,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
Refer to the information for Morgan Inc. above. If Morgan uses a perpetual inventory system, what is the cost of ending inventory under FIFO at April 30? a. $32,500 b. $38,400 c. $63,600 d. $69,500
The following items were included in Venicio Corporations inventory account on December 31, 2019: What amount should Venicio report as inventory at December 31, 2019? a. 21,000 b. 20,400 c. 26,000 d. 35,000
The moving average inventory cost flow assumption is applicable to which of the following inventory systems? Questions M7-6 and M7-7 are based on the following data: City Stationers Inc. had 200 calculators on hand on January 1, 2019, costing 18 each. Purchases and sales of calculators during the month of January were as follows: City uses a periodic inventory system. According to a physical count, 150 calculators were on hand at January 31, 2019.
Company Edgar reported the following cost of goods sold but later realized that an error had been made in ending inventory for year 2021. The correct inventory amount for 2021 was 12,000. Once the error is corrected, (a) how much is the restated cost of goods sold for 2021? and (b) how much is the restated cost of goods sold for 2022?
LIFO and Inventory Pools On January 1, 2016, Grover Company changed its inventory cost flow method to the LIFO cost method from the FIFO cost method for its raw materials inventory. It made the change for both financial statement and income tax reporting purposes. Grover uses the multiple-pools approach under which it groups substantially identical raw materials into LIFO inventory pools. It uses weighted average costs in valuing annual incremental layers. The composition of the December 31, 2018, inventory for the Class F inventory pool is as follows: Inventory transactions for the Class F inventory pool during 2019 were as follows: On March 2, 2019, 4,800 units were purchased at a unit cost of 13.50 for 64,800. On September 1, 2019, 7,200 units were purchased at a unit cost of 14.00 for 100,800. A total of 15,000 units were used for production during 2019. The following transactions for the Class F inventory pool took place during 2020: On January 11, 2020, 7,500 units were purchased at a unit cost of 14.50 for 108,750. On May 14, 2020, 5,500 units were purchased at a unit cost of 15.50 for 85,250. On December 29, 2020, 7,000 units were purchased at a unit cost of 16.00 for 112,000. A total of 16,000 units were used for production during 2020. Required: 1. Prepare a schedule to compute the inventory (units and dollar amounts) of the Class F inventory pool at December 31, 2019. Show supporting computations in good form. 2. Prepare a schedule to compute the cost of Class F raw materials used in production for the year ended December 31, 2019. 3. Prepare a schedule to compute the inventory (units and dollar amounts) of the Class F inventory pool at December 31, 2020. Show supporting computations in good form.
Inventory Errors McLelland Inc. reported net income of $175,000 for 2019 and $210,000 for 2020. Early in 2020, McLelland discovers that the December 31, 2019 ending inventory was overstated by $20,000. For simplicity, ignore taxes. Required: 1. What is the correct net income for 2019? For 2020? 2. Assuming the error was not corrected, what is the effect on the balance sheet at December 31, 2019? At December 31, 2020?