Reference no: EM133112487

Questions -

Q1. The Taehyung Company counted its ending inventory on December 31.

None of the following items were included when the total amount of the company's ending inventory was computed:

P150,000 in goods located in Taehyung's warehouse that are on consignment from another company.

P200,000 in goods that were sold by Taehyung and shipped on December 30 and were in transit on December 31; the goods were received by the customer on January 2. Terms were FOB Destination.

P300,000 in goods were purchased by Taehyung and shipped on December 30 and were in transit on December 31; the goods were received by Taehyung on January 2. Terms were FOB shipping point.

P400,000 in goods were sold by Taehyung and shipped on December 30 and were in transit on December 31; the goods were received by the customer on January 2. Terms were FOB shipping point.

The company's reported inventory (before any corrections) was P2,000,000. What is the correct amount of the company's inventory on December 31?

a. P2,550,000

b. P1,950,000

c. P2,500,000

d. P2,700,000

Q2. Euphoria Corporation uses the perpetual inventory method. On March 1, it purchased P30,000 of inventory, terms 2/10, n/30. On March 3, Euphoria returned goods that cost P3,000. On March 9, Euphoria paid the supplier.

On March 9, Euphoria should credit

a. inventory for P540.

b. inventory for P600.

c. purchase discounts for P540.

d. purchase discounts for P600.

Q3. The trial balance of Magic Shop Company showed inventories of P164,000. The inventories include some goods that have a production cost of P18,000. These goods have a manufacturing defect that will cost P6,000 to correct. The normal selling price for these goods would be P25,000, but after the remedial work they will be sold through an agent as refurbished goods at a discount of 20% on the normal selling price. The agent will receive a commission of 10% of the reduced selling price.

In relation to the defective goods, the company will recognize a loss on inventory write down of

a. P4,000

b. P6,000

c. P0

d. P1,000