Choose and explain:a. P4,270,000b. 4,170,000 Why defective materials returned to suppliers for replacement is not part of the computation for the cost of inventory? Luminous Company provided the following information at current year-end:Finished goods in storeroom, at cost including overhead of P400,0002,000,000Finished good in transit, including freight charge of P20,000, FOB shipping point250,000Finished goods held by salesmen, at selling price, cost P100,000140,000Goods in process, at cost of materials and direct labor720,000Materials1,000,000Materials in transit, FOB destination50,000Defective materials returned to suppliers for replacement100,000Shipping supplies20,000Gasoline and oil for testing finished goods110,000Machine lubricants60,000Required:Compute cost of inventory at current year-end:

The question is based on the Concept of Cost Accounting.

Answered: Choose and explain: a. P4,270,000 b.…

Choose and explain: a. P4,270,000 b. 4,170,000 Why defective materials returned to suppliers for replacement is not part of the computation for the cost of inventory?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Choose and explain:

a. P4,270,000

b. 4,170,000

Why defective materials returned to suppliers for replacement is not part of the computation for the cost of inventory?

Luminous Company provided the following information at current year-end:
Finished goods in storeroom, at cost including overhead of P400,000
2,000,000
Finished good in transit, including freight charge of P20,000, FOB shipping point
250,000
Finished goods held by salesmen, at selling price, cost P100,000
140,000
Goods in process, at cost of materials and direct labor
720,000
Materials
1,000,000
Materials in transit, FOB destination
50,000
Defective materials returned to suppliers for replacement
100,000
Shipping supplies
20,000
Gasoline and oil for testing finished goods
110,000
Machine lubricants
60,000
Required:
Compute cost of inventory at current year-end:

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