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PROBLEM 11 GAVIAL, INC. sells electric stoves. It uses the perpetual inventory system and allocates cost to inventory on a first-in, first-out basis. The company's reporting date is December 31. At December 31, 2012, inventory on hand consisted of 350 stoves at P820 each and 43 stoves at P850 each. During the month ended December 31, 2012, the following inventory transactions occurred (all purchase and sales transactions are on credit): 2012 Dec. 1 Dec. 3 Dec. 9 Dec. 10 Dec. 15 Dec. 17 Dec. 22 Dec. 26 Sold 300 stoves for P1,200 each. Five stoves were returned by customers. They had originally cost P280 each and were sold for P1,200 each. Purchased 55 stoves at P910 each. Purchased 76 stoves at P960 each. Sold 86 stoves for P1,350. Returned one damaged stove to the supplier. This stove had been purchased on December 9. Sold 60 stoves for P1,250 each. Purchased 72 stoves at P980 each.

PROBLEM 11 GAVIAL, INC. sells electric stoves. It uses the perpetual inventory system and allocates cost to inventory on a first-in, first-out basis. The company's reporting date is December 31. At December 31, 2012, inventory on hand consisted of 350 stoves at P820 each and 43 stoves at P850 each. During the month ended December 31, 2012, the following inventory transactions occurred (all purchase and sales transactions are on credit): 2012 Dec. 1 Dec. 3 Dec. 9 Dec. 10 Dec. 15 Dec. 17 Dec. 22 Dec. 26 Sold 300 stoves for P1,200 each. Five stoves were returned by customers. They had originally cost P280 each and were sold for P1,200 each. Purchased 55 stoves at P910 each. Purchased 76 stoves at P960 each. Sold 86 stoves for P1,350. Returned one damaged stove to the supplier. This stove had been purchased on December 9. Sold 60 stoves for P1,250 each. Purchased 72 stoves at P980 each.

FINANCIAL ACCOUNTING
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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Instruction: Please use moving average in answering the questions (disregard FIFO) 

PROBLEM 11 GAVIAL, INC. sells electric stoves. It uses the perpetual inventory system and allocates cost to inventory on a first-in, first-out basis. The company's reporting date is December 31. At December 31, 2012, inventory on hand consisted of 350 stoves at P820 each and 43 stoves at P850 each. During the month ended December 31, 2012, the following inventory transactions occurred (all purchase and sales transactions are on credit): 2012 Dec. 1 Dec. 3 Dec. 9 Dec. 10 Dec. 15 Dec. 17 Dec. 22 Dec. 26 Sold 300 stoves for P1,200 each. Five stoves were returned by customers. They had originally cost P280 each and were sold for P1,200 each. Purchased 55 stoves at P910 each. Purchased 76 stoves at P960 each. Sold 86 stoves for P1,350. Returned one damaged stove to the supplier. This stove had been purchased on December 9. Sold 60 stoves for P1,250 each. Purchased 72 stoves at P980 each.
Transcribed Image Text:PROBLEM 11 GAVIAL, INC. sells electric stoves. It uses the perpetual inventory system and allocates cost to inventory on a first-in, first-out basis. The company's reporting date is December 31. At December 31, 2012, inventory on hand consisted of 350 stoves at P820 each and 43 stoves at P850 each. During the month ended December 31, 2012, the following inventory transactions occurred (all purchase and sales transactions are on credit): 2012 Dec. 1 Dec. 3 Dec. 9 Dec. 10 Dec. 15 Dec. 17 Dec. 22 Dec. 26 Sold 300 stoves for P1,200 each. Five stoves were returned by customers. They had originally cost P280 each and were sold for P1,200 each. Purchased 55 stoves at P910 each. Purchased 76 stoves at P960 each. Sold 86 stoves for P1,350. Returned one damaged stove to the supplier. This stove had been purchased on December 9. Sold 60 stoves for P1,250 each. Purchased 72 stoves at P980 each.
1. What is the FIFO cost of Gavial's inventory on December 31, 2014? 2. What is the cost of goods sold in December 2014? 3. What is Gavial's gross profit in December 2014? 4. PAS 2 requires inventories to be measured at a lower cost and net realizable value. Which of the following are possible reasons wiry the net realizable value of the stoves on hand on December 31, 2014, maybe below their cost? I. Inventories are damaged. II. Inventories are wholly or partially obsolete. III. Selling prices have declined below cost. 5. If the net realizable value of Gavial's inventory on December 31, 2014, falls to P920, the inventory value should be reduced by
Transcribed Image Text:1. What is the FIFO cost of Gavial's inventory on December 31, 2014? 2. What is the cost of goods sold in December 2014? 3. What is Gavial's gross profit in December 2014? 4. PAS 2 requires inventories to be measured at a lower cost and net realizable value. Which of the following are possible reasons wiry the net realizable value of the stoves on hand on December 31, 2014, maybe below their cost? I. Inventories are damaged. II. Inventories are wholly or partially obsolete. III. Selling prices have declined below cost. 5. If the net realizable value of Gavial's inventory on December 31, 2014, falls to P920, the inventory value should be reduced by
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