POST TEST - Answer Key

Matching Problem 1
1. B 9. C 17. C
2. C 10. A 18. A
3. A 11. A 19. C
4. C 12. C 20. A
5. A 13. A 21. A
6. B 14. A 22. C
7. C 15. A
8. A 16. C

Problem 2
23. P710,000
4,000 units @ P65 P260,000
6,000 units @ P75 450,000

Total cost of Pans P710,000

24. P210,000
Total cost of Kettles (5,000 units @ P42) P210,000

25. P780,300

Item Units Unit Cost NRV* Inventory Amount**

Pans 4,000 P65 P61.20 P244,800
6,000 75 61.20 367,200
Kettles 5,000 42 33.66 168,300
P780,300
*Estimated selling price - Estimated cost to sell

**Lower of cost or NRV

26. P137,300
Total cost of Inventory (P710,000 + P210,000) P920,000
Less Inventory value (no. 25) 780,300
Required allowance for Inventory writedown P139,700

Less allowance, May 1 (see below) 2,400

Loss on Inventory writedown for May P137,300
 Item Units Unit Cost NRV* Allowance
Pans 10,000 P60 P72.00 P -----
Kettles 6,000 40 39,60 2,400

Allowance for inventory writedown, May 1 P2,400

*The adjustment on selling prices Is effective only starting June 1.

27. P1,658,000
Pans:
10,000 units @ P60 P600,000

10,000 units @ P65 650,000 P1,250,000

Kettles:
6,000 units @ P40 P240,000
4,000 units @ P42 168,000 408,000
Total cost of sales P1,658,000

Problem 3
28. 60%
Cost Retail
Beginning inventory P1,100,000 P2,200,000
Purchases 15,800,000 26,300,000
Freight-In 400,000

Purchases returns (600,000) (1,000,000)

Purchases allowances (300,000)
Departmental transfer In 400,000 800,000
Net markups 600,000
Net markdowns (900,000)
Goods available for sale P16,800,000 P28,000,000

Cost ratio (P16,800,000/P28,000,000) 60%

29. P3,000,000
Goods available for sale at retail P28,000,000
Less: Sales P24,700,000

Sales returns (350,000)

Employee discounts 600,000
Loss from breakage 50,000 25,000,000
 Ending Inventory at retail P3,000,000

30. P1,800,000

Ending Inventory, at cost (P3,000,000 x 60%) P1,800,000

31. P15,000,000
Goods available for sale at cost P16,800,000
Less ending Inventory, at cost (see no. 30) 1,800,000
Estimated cost of sales P15,000,000

32. P780,000
Ending Inventory, at cost (see no. 30) P1,800,000
Physical Inventory, at cost (P1,700,000 x 60%) 1,020,000
Estimated Inventory shortage P 780,000

Problem 4

33. P918,000
34. P1,032,000
35. P1,341,000
36. P612,000

37. P688,000
38. P894,000
39. P306,000
40. P344,000
41. P447,000
42. P618,000

43. P788,000
44. P761,000
45. P127,000
46. P227,000
47. P94,000
 2015 2016 2017

Accounts Receivable-12/31/17 4,000.00 9,000.00 141,000.00

Cash received applied to

Current Year 744,000.00 809,000.00 1,044,000.00

A/R of prior year 75,000.00 84,000.00

A/R of two years prior 10,000.00

Total Credit Sales 833,000.00 902,000.00 1,185,000.00

Cash Sales 85,000.00 130,000.00 156,000.00

Total Sales 918,000.00 1,032,000.00 1,341,000.00

Cost of Goods Sold 612,000.00 688,000.00 894,000.00

Gross Profit 306,000.00 344,000.00 447,000.00

Computation of Average Gross Profit:

Total Sales 3,291,000.00

Inventory-12/31/14 58,000.00
Purchases 2,230,000.00
Cost of Goods Available for Sale 2,288,000.00

Inventory-12/31/17 (94,000.00)
Cost of Goods Sold for the 3-year period 2,194,000.00
Gross Profit for the 3-year period 1,097,000.00

Sales 100%
Cost of Sales 67%
Average Gross Profit Rate 33%
 Computation of Accounts Payable:
2015 2016 2017
Beginning Balance 25,000 81,000 163000
Cash paid for the current year 600,000 625,000 706,000
Total Cash Paid 625,000 706,000 869,000
Cash to be paid next year 706,000 869,000 924,000
Ending Balance 81,000 163,000 55,000

Computation of Purchases and

Ending Inventory:

2015 2016 2017 Total

Cash paid for the current year 600,000.00 625,000.00 706,000.00 1,931,000.00

Ending Accounts Payable 81,000.00 163,000.00 55,000.00 299,000.00

Purchases 681,000.00 788,000.00 761,000.00 2,230,000.00

Beginning Inventory 58,000.00 127,000.00 227,000.00 58,000.00

Cost of Goods Available for Sale 739,000.00 915,000.00 988,000.00 2,288,000.00

Ending Inventory 127,000.00 227,000.00 94,000.00 94,000.00

Cost of Goods Sold 612,000.00 688,000.00 894,000.00 2,194,000.00

Problem 5
48. P1,934,255
Accounts receivable, 12.31.10 (¥1,000,000/0.47 x .9091) P 1,934,255

49. P116,056
Peso equivalent of futures contract, 12.31.10
(¥1,000,000/0.47) P 2,127,660
Notional amount ((¥1,000,000/0.50) 2,000,000
Expected payment to counterparty P 127,660
Present value of P1 at 10% for 1 period 0.9091
Futures contract payable P 116,056
50. P181,818
Peso equivalent of futures contract, 12.31.11
((¥1,000,000/0.55) P 1,818,182
Notional amount ((¥1,000,000/0.50) 2,000,000
Futures contract receivable, 12.31.11 P 181,818