Vincenzo Cassano Company sells one product, which it purchases from various suppliers. The trial balance at December 31, 2020, included the following accounts: Sales (100,000 units at P150) P15,000,000 Sales discount 1,000,000 Purchases 9,300,000 Purchase discount 400,000 Freight in 100,000 Freight out 200,000 The inventory purchases during 2020 were as follows: Units Unit cost Total cost Beginning inventory, January 1 20,000 P60 P 1,200,000 Purchases, quarter ended March 31 30,000 65 1,950,000 Purchases, quarter ended June 30 40,000 70 2,800,000 Purchases, quarter ended Sept. 30 50,000 75 3,750,000 Purchases, quarter ended Dec. 31 10,000 80 800,000 150,000 P10,500,000 Vincenzo Cassano’s accounting policy is to report inventory in its financial statements at the lower of cost or market, applied to total inventory. Cost is determined under the first-in, first-out method. Vincenzo Cassano has determined that, at December 31, 2020, the replacement cost of its inventory was P70 per unit and the net realizable value was P72 per unit. The normal profit margin is P10 per unit. What should Vincenzo Cassano report as cost of goods sold for the year 2020?
47. Vincenzo Cassano Company sells one product, which it purchases from various suppliers. The
Sales (100,000 units at P150) P15,000,000
Sales discount 1,000,000
Purchases 9,300,000
Purchase discount 400,000
Freight in 100,000
Freight out 200,000
The inventory purchases during 2020 were as follows:
Units Unit cost Total cost
Beginning inventory, January 1 20,000 P60 P 1,200,000 Purchases, quarter ended March 31 30,000 65 1,950,000 Purchases, quarter ended June 30 40,000 70 2,800,000 Purchases, quarter ended Sept. 30 50,000 75 3,750,000 Purchases, quarter ended Dec. 31 10,000 80 800,000 150,000 P10,500,000
Vincenzo Cassano’s accounting policy is to report inventory in its financial statements at the lower of cost or market, applied to total inventory. Cost is determined under the first-in, first-out method.
Vincenzo Cassano has determined that, at December 31, 2020, the replacement cost of its inventory was P70 per unit and the net realizable value was P72 per unit. The normal profit margin is P10 per unit.
- What should Vincenzo Cassano report as cost of goods sold for the year 2020?
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