1. What is the correct amount of inventory? 2. What is the correct amount of accounts payable? 3. What is the correct amount of net sales?
Raffy Company, a manufacturer of small tools, provided the following information for the year ended
December 31, 2019:
Inventory at December 31 based on physical count 1,750,000
Accounts payable at December 31 1,200,000
Net sales 8,500,000
Additional information:
A. Included in the physical count were tools billed to a customer FOB shipping point on December
31, 2019. These tools had a cost of P28,000 and were billed at P35,000. The shipment was in
loading dock waiting to be picked by the common carrier.
B. Goods were in transit from a vendor to Raffy Company on December 31, 2019. The invoice cost
was P50,000 and the goods were shipped FOB shipping point on December 29, 2019.
C. Work in
December 30,2019.
D. Tools returned by customers and held pending inspection in the returned goods area on
December 31, 2019 were not included in the physical count. On January 8, 2020, the tools costing
P26,000 were inspected and returned to inventory. Credit memos totaling P40,000 were issued
to the customers on the same date.
E. Tools shipped to a customer FOB destination on December 26,2019 were in transit on December
31, 2019 and had a cost of P25,000. Upon notification of receipt by the customer on January 2,
2020, Raffy Company issued a sales invoice for P42,000.
F. Goods with an invoice cost P30,000 received from a vendor at 5:00PM on December 31, 2019
were recorded on a receiving report dated January 2, 2020. The goods were not included in
accounts payable on December 31, 2019.
G. Goods received from a vendor on December 26, 2019 were included in the physical count.
However, the related P60,000 vendor invoice was not included in accounts payable on December
31, 2019 because the accounts payable copy of the receiving report was lost.
H. On January 3, 2020, a monthly freight bill in the amount of P20,000 was received. The bill
specifically related to merchandise purchased in December 2019, one-half of which was still in
the inventory on December 31, 2019.
The freight charge was not included in either the inventory or in accounts payable on December
31, 2019.
1. What is the correct amount of inventory?
2. What is the correct amount of accounts payable?
3. What is the correct amount of net sales?
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