Reference no: EM133134165

Question - You are auditing the inventories account of TBK Company for the year 2021. The following were noted during the course of your audit:

Physical Inventory, Nov 30, 2021 1,486,000

Physical Inventory, Dec 31, 2021 1,625,000

Sales for the year ended Dec 31, 2021 4,400,000

Purchases for the year ended Dec 31, 2021 3,275,000

The following transactions were recorded as purchases for the month of December 2021:

a. Goods worth P125,000 were held on consignment from N Co. had been included in the physical count because it is not yet sold as of December 31, 2021.

b. Goods costing P240,000 were purchased on credit from A Co. on December 27, 2021 on FOB shipping point terms. The goods were shipped on December 28, 2021 but as of December 31 they have not arrived yet.

c. Goods costing P150,000 were purchased on credit (FOB Destination) from SM Co. on December 28, 2021. The goods were received on December 29, 2021.

d. On December 30, 2021, purchased goods costing P120,000 on credit (FOB shipping point) terms to P Corp. for P190,000. The goods were dispatched from the warehouse of the seller on December 30, 2021 but had not received until January 2, 2022.

e. On December 29, 2021, inventory was purchased amounting to P200,000 but still in transit as of December 31, 2021 at terms FOB shipping point. The invoice cost excludes P10,000 freight cost.

f. On December 30, 2021, inventory was purchased with invoice price of P140,000, still in transit, Free Along Side, invoice cost includes delivery cost alongside the vessel of P15,000 but excluding the cost of shipment P25,000.

g. On December 31, 2021,inventory purchased and received with an invoice cost of P275,000, CIF (excluded in the invoice cost was insurance cost and freight totaling P15,000)

h. Inventories were purchased with buyback agreement amounting to P125,000, these inventories were delivered and received on December 26, 2021.

The following transactions were recorded as sales for the month of December 2021:

i. Sale of goods for P225,000 was recorded in the company's books on December 31, 2021. Your further inquiry reveals that the goods were shipped to buyer on December 31, term FOB shipping point.

j. Shipment of goods on December 29, 2021 terms FOB destination was recorded as sales for P360,000 (cost of P210,000) in December. The goods were received by the buyer on January 3, 2022.

k. A shipment in December was made to a loyal customer, the invoice price of this shipment was P200,000. This invoice was sold at cost.

Required -

1. How much is the adjusted balance of purchases as of December 31, 2021?

a. P3,025,000

b. P3,045,000

c. P3,060,000

d. P3,075,000

2. How much is the adjusted balance of inventory as of December 31, 2021?

a. P2,110,000

b. P2,320,000

c. P2,430,000

d. P2,445,000

3. How much is the cost of sales for the period ending December 31, 2021?

a. P2,106,000

b. P2,116,000

c. P2,216,000

d. P2,226,000

4. How much is the adjusted balance of sales as of December 31, 2021?

a. P4,400,000

b. P4,200,000

c. P4,175,000

d. P4,150,000