You are reviewing the inventories of Sheep-Ahoy Company and found the following items:In the shipping room was a product costing P 264,000 marked "Hold for shipping instruction". This item was not included in the count although the purchased order of the customer was received on December 10, 2022. Actual shipment and billing happened on January 2, 2023.On December 28, goods costing P 232,960 were shipped to Holy Cow Company. The invoice accompanying the goods with selling price of P 300,000 was marked "on consignment". These goods were excluded from the inventory at year end.The company received merchandise costing P 92,500 on January 3, 2023. The invoice was received and recorded on January 4, 2023 with FOB shipping point ter. Shipment was made on December 31. The goods were included in the year-end inventory although these were not yet received when the physical count was taken.A customized product of a VIP customer was completed and in the shipping room at year-end. Actual shipment was made on January 5, 2023 when the customer was also billed at P 500,000. This product was included in the inventory at December 31.How much is the net increase (decrease) in inventory at December 31, 2022?a. 506,210b. 856,500c. 496,960d. 996,960

The inventory held on date shall include all the physical inventory held by the company.

Answered: You are reviewing the inventories of…

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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You are reviewing the inventories of Sheep-Ahoy Company and found the following items:

In the shipping room was a product costing P 264,000 marked "Hold for shipping instruction". This item was not included in the count although the purchased order of the customer was received on December 10, 2022. Actual shipment and billing happened on January 2, 2023.
On December 28, goods costing P 232,960 were shipped to Holy Cow Company. The invoice accompanying the goods with selling price of P 300,000 was marked "on consignment". These goods were excluded from the inventory at year end.
The company received merchandise costing P 92,500 on January 3, 2023. The invoice was received and recorded on January 4, 2023 with FOB shipping point ter. Shipment was made on December 31. The goods were included in the year-end inventory although these were not yet received when the physical count was taken.
A customized product of a VIP customer was completed and in the shipping room at year-end. Actual shipment was made on January 5, 2023 when the customer was also billed at P 500,000. This product was included in the inventory at December 31.

How much is the net increase (decrease) in inventory at December 31, 2022?

a. 506,210

b. 856,500

c. 496,960

d. 996,960

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