Compute the proper inventory amount to be reported on XXX’s statement of financial position for 2021. By how much would the net income be understated if no adjustments were?
PROBLEM 6: XXX Company is preparing its 2021 financial statements. Prior to any adjustments, inventory is valued at P1,605,000. The following information has been found relating to certaininventory transactions from your cut-off test:
A. Goods valued at P110,000 are on consignment with a customer. These goods werenot included in the ending inventory figure.
B.Goods costing P87,000 were received from a vendor on January 5, 2022. The relatedinvoice was received and recorded on January 12, 2022. The goods were shippedonDecember 31, 2021, terms FOB shipping point.
C. Goods costing P85,000, sold for P102,000, were shipped on December 31, 2021, andwere delivered to the customer on January 2, 2022. The terms of the invoice wereFOBshipping point. The goods were included in the ending inventory for 2021 and thesalewas recorded in 2022.
D. A P35,000 shipment of goods to a customer on December 31, terms FOB destinationwas not included in the year-end inventory. The goods cost P26,000 andweredelivered to the customer on January 8, 2022. The sale was properly recorded in 2022.
E. The invoice for goods costing P35,000 was received and recorded as a purchaseonDecember 31, 2021. The related goods, shipped FOB destination were receivedonJanuary 2, 2022 and thus were not included in the physical count.
F. Goods valued at P154,000 are on consignment from a vendor. These goods werenot included in the physical inventory.
G. A P60,000 shipment of goods to a customer on December 30, 2021, terms FOBdestination, was recorded as a sale in 2022. The goods, costing P37,000 and deliveredto the customer on January 6, 2022, were not included in the 2021 ending inventory.
- Compute the proper inventory amount to be reported on XXX’s
statement of financial position for 2021. - By how much would the net income be understated if no adjustments were?
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