Reference no: EM132849743
Question -
Q1. Lucy Company uses the average retail inventory method to estimate inventory. The following information was obtained from the accounting records for the year ended December 31, 2021:
At cost: Inventory, January 1 - P617,000;
Purchases - P1,281,000;
Purchase returns - P21,000;
Freight-in - P31,200.
At retail: Inventory, January 1 - P1,057,000;
Purchases - P2,158,000;
Purchase returns - P35,000;
Sales - P2,365,000;
Sales returns - P188,880;
Markdowns - P126,880.
How much is the cost of inventory pilferage if the physical count revealed an ending inventory at retail of P780,000?
Q2. Thanos Company purchased machinery for P250,000 on July 1, 2018. Freight and installation costs incurred by Golden Pothos amounted to P18,000. The asset is estimated to have a useful life of 5 years and an estimated salvage value of P20,000. It is the company's policy to depreciate this machinery to the nearest month using double-declining balance method.
On January 1, 2020, the company spent P79,360 for the upgrade of this machinery that improved its condition beyond its original assessed standard of performance that led to a significant improvement in the quality of its output. At this time, the machinery's estimated residual value has changed to P40,000 and the company decides to change to the straight-line method.
How much is the revised depreciation expense for this machinery for the year ended December 31, 2020?
Q3. Ji Company showed that a machine was purchased on January 2, 2016, for P400,000 which was being depreciated on a 10-year estimated life with no scrap value. Straight-line method of depreciation was being used. On January 1, 2019, Ji Company decided that the machine should have been depreciated on a 13-year life counted from the date of acquisition. Recorded depreciation in 2019 was P40,000.
If the change in life is to be recognized, the depreciation expense to be recorded in the year 2019 should be?
Q4. The warehouse of Kora Company was destroyed by fire on December 5, 2021. The following information is available from the records of the company to determine the total loss from fire.
Inventory, January 1- P450,000
Inventory, November 30, 2021 via physical count on this date- P600,000
Total purchases recorded up to November 30, 2021- P1,900,000
Total purchases recorded up to date of fire- P2,000,000
Total sales recorded up to November 30, 2021- P2,200,000
Total sales recorded up to date of fire- P2,500,000
There were goods delivered to the consignee on November 27, 2021, costing P28,000. This was properly recorded as part of sales when sold by the consignee on December 4, 2021. Purchases included goods costing P50,000 which were purchased in advance in November with the term FOB Destination point. The goods were still in transit as of the date of the fire. How much is the estimated loss on fire?