SM3 Inventory analysis and proposed adjusting journal entryOslo Inc. uses a perpetual inventory system and reports inventory using the First-In-First-Out(FiFo) basis. Oslo's inventory per record on December 31, 2023 was P820,000. A physicalcount conducted on that day found inventory on hand of P800,000. An investigation of thediscrepancy revealed the following information:[1.] Goods worth P50,000 held on consignment from Kana Co. had been included in thephysical count.[2.] Goods costing P15,000 were purchased on credit from Sakura Co. on December 27.Freight term of the purchase was FOB Shipping Point. The goods were shipped onDecember 28 but remained in transit as of December 31 and thus, was not included in thephysical count. The purchase invoice was received and processed on December 31, 2023.[3.] Goods costing P60,000 were sold on credit to Naruto Co. for P75,000 on December 28,2023 under FOB Destination freight terms. The goods were still in transit on December 31.The sales invoice was processed and recorded on December 29, 2023.[4.] Goods costing P25,000 were purchased on credit (FOB Destination) from Shibuya Co.on December 28, 2023. The goods were received on December 30, 2023 and were includedin the physical count. The purchase invoice was received and processed on shipment date.[5.] On December 31, 2023, Nagasaki sold goods costing P40,000 on credit (FOB ShippingPoint) to Onoki Corporation for P85,000. The goods were dispatched from the warehouse onDecember 31, 2023 but the sales invoice had not been processed at that date. [6.] Damagedinventory items valued at P15,000 were discovered during the physical count. These itemswere omitted from the physical count but write-off of these items was still pending.Determine the following as a result of your audit:1. What is the adjusted inventory balance as of December 31, 2023?2. What adjustment should be made to the reported sales of Oslo in its December 31, 2023statement of comprehensive income?Please prepare a working paper.

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Description: SM3 Inventory analysis and proposed adjusting journal entryOslo Inc. uses a perpetual inventory system and reports inventory using the First-In-First-Out(FiFo) basis. Oslo's inventory per record on December 31, 2023 was P820,000. A physicalcount cond

Under perpetual inventory system the inventory balance is updated after each sale and purchase and…

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Oslo Inc. uses a perpetual inventory system and reports inventory using the First-In-First-Out (FiFo) basis. Oslo's inventory per record on December 31, 2023 was P820,000. A physical count conducted on that day found inventory on hand of P800,000. An investigation of the discrepancy revealed the following information: [1.] Goods worth P50,000 held on consignment from Kana Co. had been included in the physical count.

Oslo Inc. uses a perpetual inventory system and reports inventory using the First-In-First-Out (FiFo) basis. Oslo's inventory per record on December 31, 2023 was P820,000. A physical count conducted on that day found inventory on hand of P800,000. An investigation of the discrepancy revealed the following information: [1.] Goods worth P50,000 held on consignment from Kana Co. had been included in the physical count.

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Chapter6: Cost Of Goods Sold And Inventory

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Problem 50E: Inventory Costing Methods Crandall Distributors uses a perpetual inventory system and has the...

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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.

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Question

SM3

Inventory analysis and proposed adjusting journal entry
Oslo Inc. uses a perpetual inventory system and reports inventory using the First-In-First-Out
(FiFo) basis. Oslo's inventory per record on December 31, 2023 was P820,000. A physical
count conducted on that day found inventory on hand of P800,000. An investigation of the
discrepancy revealed the following information:
[1.] Goods worth P50,000 held on consignment from Kana Co. had been included in the
physical count.
[2.] Goods costing P15,000 were purchased on credit from Sakura Co. on December 27.
Freight term of the purchase was FOB Shipping Point. The goods were shipped on
December 28 but remained in transit as of December 31 and thus, was not included in the
physical count. The purchase invoice was received and processed on December 31, 2023.
[3.] Goods costing P60,000 were sold on credit to Naruto Co. for P75,000 on December 28,
2023 under FOB Destination freight terms. The goods were still in transit on December 31.
The sales invoice was processed and recorded on December 29, 2023.
[4.] Goods costing P25,000 were purchased on credit (FOB Destination) from Shibuya Co.
on December 28, 2023. The goods were received on December 30, 2023 and were included
in the physical count. The purchase invoice was received and processed on shipment date.
[5.] On December 31, 2023, Nagasaki sold goods costing P40,000 on credit (FOB Shipping
Point) to Onoki Corporation for P85,000. The goods were dispatched from the warehouse on
December 31, 2023 but the sales invoice had not been processed at that date. [6.] Damaged
inventory items valued at P15,000 were discovered during the physical count. These items
were omitted from the physical count but write-off of these items was still pending.
Determine the following as a result of your audit:
1. What is the adjusted inventory balance as of December 31, 2023?
2. What adjustment should be made to the reported sales of Oslo in its December 31, 2023
statement of comprehensive income?
Please prepare a working paper.

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