ABC Co. a manufacturer provided the ff information for the year ended December 31, 2017. What is the correct amount of inventory? Inventory at 31 December based onphysical countAccounts payable at 31 DecemberNet Sales1,750,0001,200,0008,500,000Additional information:a. Included in the physical count were tools billed to a customer FOBshipping point on 31 December 2017. These tools had a cost ofP28,000 and were billed at P35,000. The shipment was in loadingdock waiting to be picked up by the common carrier.b. Goods were in transit from a vendor to QC on 31 December 2017.The invoice cost was P50,000 and the goods were shipped FOBshipping point on 29 December 2017.c. Work in process inventory costing P20,000 was sent to an outsideprocessor for plating on 30 December 2017d. Tools returned by customers and held pending inspection in thereturned goods area on 31 December 2017 were not included in thephysical count. On 8 January 2018, the tools costing P26,000 wereinspected and returned to inventory. Credit memos totaling P40,000were issued to the customers on the same date.e. Tools shipped to a customer FOB Destination on 26 December 2017were in transit on 31 December 2017 and had a cost of P25,000.Upon notification of receipt by the customer on 2 January 2018, QCissued a sales invoice for P42,000f. Goods with an invoice cost of P30,000 received from a vendor at5:00 PM on 31 December 2017 were recorded on receiving reportdated 2 January 2018. The goods were not included in the physicalcount but the invoice was included in accounts payable in 31December 2017g. Goods received from a vendor on 26 December 2017 were includedin the physical count. However, the related P60,000 vendor invoicewas not include in accounts payable on 31 December 2017 becausethe accounts payable copy of the receiving report was losth. On 3 January 2018, a monthly freight bill in the amount of P20,000was received. The bill specifically related to merchandise purchasedin December 2017, one-half of which was still in the inventory on 31December 2017. The freight charge was not included in either theinventory or in accounts payable on 31 December 2017.

Name: ABC Co. a manufacturer provided the ff information for the year ended
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Description: ABC Co. a manufacturer provided the ff information for the year ended December 31, 2017. What is the correct amount of inventory? Inventory at 31 December based onphysical countAccounts payable at 31 DecemberNet Sales1,750,0001,200,0008,500,000Additi

Inventory : (1) Inventory consist of total of three components. (2) Raw material, Work-in-process…

Answered: nts payable at 31 December ales…

Business

Accounting

nts payable at 31 December ales 1,200,000 8,500,000 prmation: n the physical count were tools billed to a customer FC

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

Topic Video

Question

ABC Co. a manufacturer provided the ff information for the year ended December 31, 2017.

What is the correct amount of inventory?

Inventory at 31 December based on
physical count
Accounts payable at 31 December
Net Sales
1,750,000
1,200,000
8,500,000
Additional information:
a. Included in the physical count were tools billed to a customer FOB
shipping point on 31 December 2017. These tools had a cost of
P28,000 and were billed at P35,000. The shipment was in loading
dock waiting to be picked up by the common carrier.
b. Goods were in transit from a vendor to QC on 31 December 2017.
The invoice cost was P50,000 and the goods were shipped FOB
shipping point on 29 December 2017.
c. Work in process inventory costing P20,000 was sent to an outside
processor for plating on 30 December 2017
d. Tools returned by customers and held pending inspection in the
returned goods area on 31 December 2017 were not included in the
physical count. On 8 January 2018, 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 26 December 2017
were in transit on 31 December 2017 and had a cost of P25,000.
Upon notification of receipt by the customer on 2 January 2018, QC
issued a sales invoice for P42,000
f. Goods with an invoice cost of P30,000 received from a vendor at
5:00 PM on 31 December 2017 were recorded on receiving report
dated 2 January 2018. The goods were not included in the physical
count but the invoice was included in accounts payable in 31
December 2017
g. Goods received from a vendor on 26 December 2017 were included
in the physical count. However, the related P60,000 vendor invoice
was not include in accounts payable on 31 December 2017 because
the accounts payable copy of the receiving report was lost
h. On 3 January 2018, a monthly freight bill in the amount of P20,000
was received. The bill specifically related to merchandise purchased
in December 2017, one-half of which was still in the inventory on 31
December 2017. The freight charge was not included in either the
inventory or in accounts payable on 31 December 2017.

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