PHNelia Company had used the weighted average method of inventory since it began its operation in 2019. Nelia decided to change to FIFO method for determining inventory costs at the beginning of 2021. The following schedule shows the net income and year-end inventory balances for the past two years 2019 and 2020:
2019
Net income using weighted average Year-end inventory-FIFO
P3,000,000
2020
P3,250,000
400,000
600,000
Year-end inventory-weighted average The merchandise inventory end in 2020 is 10,000 units.
250,000 500,000
The trial balance at December 31, 2021 included the following accounts:
Sales (at SP of P80/unit) Sales discount
P6,400,000
Purchases
64,000 6,480,000
Purchase discount
980,000
The inventory purchases during 2021 were as follows:
Purchases, 1st quarter ended
Units
Unit cost
20,000
30,000
40,000
P62
64
Purchases 2nd quarter ended
66
68
Purchases 3rd quarter ended Purchases 4th quarter ended
10,000
Nelia's accounting policy is to report inventory on its financial statements at the lower of cost or net realizable value, applied to total inventory.
inventory was P67 per unit and the estimated selling price was P70 per unit and Nelia has determined that on December 31, 2021, the replacement cost of its the estimated cost of disposal was P5. The normal profit margin is P8 per unit.
Based on the above data, compute for the following::
Loss on inventory write-down in 2021.
a. Nil
c. P100,000
b. P50,000
d. P120,000
Cost of goods sold after inventory write-down in 2021.
a. P4,150,000 b. P4,100,000
C. P4,120,000
d. P4,100,000
2019
Net income using weighted average Year-end inventory-FIFO
P3,000,000
2020
P3,250,000
400,000
600,000
Year-end inventory-weighted average The merchandise inventory end in 2020 is 10,000 units.
250,000 500,000
The trial balance at December 31, 2021 included the following accounts:
Sales (at SP of P80/unit) Sales discount
P6,400,000
Purchases
64,000 6,480,000
Purchase discount
980,000
The inventory purchases during 2021 were as follows:
Purchases, 1st quarter ended
Units
Unit cost
20,000
30,000
40,000
P62
64
Purchases 2nd quarter ended
66
68
Purchases 3rd quarter ended Purchases 4th quarter ended
10,000
Nelia's accounting policy is to report inventory on its financial statements at the lower of cost or net realizable value, applied to total inventory.
inventory was P67 per unit and the estimated selling price was P70 per unit and Nelia has determined that on December 31, 2021, the replacement cost of its the estimated cost of disposal was P5. The normal profit margin is P8 per unit.
Based on the above data, compute for the following::
Loss on inventory write-down in 2021.
a. Nil
c. P100,000
b. P50,000
d. P120,000
Cost of goods sold after inventory write-down in 2021.
a. P4,150,000 b. P4,100,000
C. P4,120,000
d. P4,100,000