Reference no: EM133165658
Questions -
Q1. Catwalk Company, a clothing store, uses the retail inventory method. The following information relates to 2014 operations:
Inventory, January 1, 2014 at cost 142,000
Inventory, January 1, 2014 at sales price 204,000
Purchases at cost 313,000
Purchases at sales price 520,000
Additional mark-up on normal sales price 20,000
Sales (including 80,000 of items which were marked down from 124,000) 620,000
Rounding the cost ratio to two decimal places, the cost of the December 31, 2014 inventory determined by the retail inventory method is:
a. 46,800
b. 50,400
c. 52,000
d. 80,000
Q2. You were assigned to audit the factory accounts of Gardenia Corp. for the year ended December 31, 2012. The following data were gathered: Manufacturing cost totaled P900,000; cost of goods manufactured was P800,000, of which factory overhead was 75% of direct labor. Overhead was 25% of total manufacturing cost.
Beginning work-in-process inventory January 1, 2012 was 60% of ending work-in-process inventory, December 31, 2012. Manufacturing costs for the year ended December 31, 2012 submitted to you by the factory accountant was as follows:
Raw material used P 400,000
Direct labor 275,000
Factory overhead 225,000
Total P 900,000
Assume that the cost percentage relationships as stated are correct. Adjusted on manufacturing cost at December 31, 2012 was:
a. Debit: Raw materials used P 25,000 Credit: Direct Labor P 25,000
b. Debit: Direct Labor P 25,000 Credit: Raw materials used P 25,000
c. Debit: Raw materials used P 50,000 Credit: Direct Labor P 50,000
d. Debit: Direct Labor P 50,000 Credit: Raw materials used P 50,000 1
Work in process inventory at December 31, 2012 was
a. P200,000 b. P225,000 c. P250,000 d. P275,000
Q3. Louis Co.'s usual sales terms are net 60 days, FOB shipping point. Sales, net returns and allowances, totaled P2,300,000 for the year ended December 31, 2012, before year-end adjustments.
Additional data are as follows:
On December 27, 2012, Louie authorized a customer to return, for full credit, good shipped and billed at P50,000 on December 15, 2012. The returned goods were received by Louie on January 4, 2013 and a P50,000 credit memo was issued and recorded on the same date.
Goods with an invoice amount of P 80,000 were billed and recorded on January 3, 2012. The goods were shipped on December 30, 2012.
Goods with an invoice amount of P 100,000 were billed and recorded on December 30, 2012. The goods were shipped on January 3, 2013.
The adjusted net sales for 2012 were
a. P2,300,000 b. P2,250,000 c. P2,230,000 d. P2,070,000