The Cost of Goods Sold For The Month of December: Excel Professional Services, Inc

EXCEL PROFESSIONAL SERVICES, INC.
22
26
29
Sold 60 bicycles for P1,250 each, Purchased 72 bicycles at p980 each. Two bicycles,
sold on 22 December, were returned by a customer. The bicycles were badly damaged
so it was decided to write them off. They had originally cost P910 each.
21. The cost of goods sold for the month of December
using moving average method is (Round unit costs to the nearest peso) a. P367,230
c. P366,320 b. P365,410
d. P372,725
a. I, II, III and IV
C. I and II only b. I, II and III only d. I, II and IV only 26. The closing inventory at cost of
a company amounted
to P284,700. The following items were included at cost in the total: • 400
coats, which had cost R80 each and normally
sold for P150 each. Owing to a defect in manufacture, they were all sold after the
reporting date at 50% of their normal price. Selling expenses amounted to 5% of the
proceeds. 800 skirts, which had cost P20 each. These too were found to be defective.
Remedial work cost P5 per skirt and selling expenses for the batch totaled
P800. They were sold for P28 each. What should the inventory value be according to
PAS 2 Inventories after considering the above items? a. P281,200
C. P282,800 b. P282,100
d. P329,200
22. The cost of goods sold for the month of December
using FIFO method is a. P367,230
c. P366,320 b. P365,410
d. P372,725
SOLUTION FOR QUESTION #21:
Date Dec. 1 Dec. 2
Description Balance Sale Sales
returns
Units
393 (300)
Unit Cost 823 823
Total Cost
323,550 (246,900)
98
Page 1 of 7
55
Dec. 3 Balance Dec. 9 Dec. 13 Balance Dec. 15 Balance
Purchase Purchase
76
823 823 910 960 890 890 890

4,115 80,765 50,050 72,960 203,775 (76,540) 127,235
229
11
.
27. The following figures relate to inventory held at December 31:
Per Unit Cost
P10 General selling price
12 Selling price in a binding contract to sell 14 Quoted price in an active market for
similar asset Estimated costs to sell There were 10,000 units (including
2,000 held to satisfy a binding contract to sell). At what amount should the
entity report the inventory on its statement of financial position? a.
P100,000
C. P90,000 b. P 92,000
d. P84,000
3
Sale
( 85 143
Purchase
returns
Sale
Dec. 16 Balance Dec. 22 Balance Dec. 26 Balance
(1) 142 ( 60)
82 72 154
910 890 890 890 980 932

( 910) 126,325 (53,400) 72,925 70,560 143,485
and equipment (PPE)?
IPPE are tangible items that are held for use in the 1. Which statement is incorrect
regarding property, plants EX L.
naods or services, for
Purchase
Sales, Dec. 2 Sales returns, Dec. 3 Sales, Dec. 15 Sales, Dec. 22 Cost of goods sold
P246,900 ( 4,115)
76,540
53,400 P372,725
www.prtc.com.ph
28. Which is correct regarding write-down of inventory to
net realizable value? a. Materials and other supplies held for use in the
production of inventories are not written down below cost if the finished products in
which they will be incorporated are expected to be sold at or
above cost. b. When a decline in the price of materials indicates
that the cost of the finished products exceeds net realizable value, the materials are
written down to nét realizable value. In such circumstances, the best available measure
of the net realizable value
of materials is the replacement cost. C. Both a and b. d. Neither a nor b.
d.
D 23. Which of the following is not affected by the inventory

valuation method used by an entity? a. Cost of goods sold. b. Net income of the entity. C.
Amounts owed for income taxes. d. Amounts paid to acquire merchandise.
29. The following figures relate to inventory of materials
held at December 31:
24. Which statement is correct regarding net realizable
value (NRV)? a. NRV refers to the net amount that an entity
expects to realize from the sale of inventory in the
ordinary course of business. b. NRV for inventories may not equal fair value less
costs to sell. c. Both a and b. d. Neither a nor b.
Item X
Item Y
Cost
P400,000
P200,000 180,000
salinment cuch a used to construct an item of property, plant and Costs incurred relating to leases of assets
that are with a new class of customer.
370,000
Replacement cost Estimated costs to convert materials into finished goods
100,000 320,000
200,000 610,000
Estimated selling price of finished goods
FAR.2805
25. The cost of inventories may not be recoverable if
1. The inventories are damaged II. The inventories have become wholly or partially
obsolete III. The selling prices have declined IV. The estimated costs of completion or
the estimated
costs to be incurred to make the sale have increased.
Estimated costs to sell
10,000
15,000
The entity should recognize loss on write-down of inventory of materials of
Page 4 of 9
www.prtc.com.ph
FAR.2802
B1.

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EXCEL PROFESSIONAL SERVICES, INC.

823 823 910 960 890 890 890

910 890 890 890 980 932

D 23. Which of the following is not affected by the inventory

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