ABC Enterprises is a wholesaler and retailer store.

  The following data is presented to you.

Items currently being used for window display                                                                 294,322

 Items in receiving department, refused due to damage                                                  180,000

 Items in the receiving dock, returned by the customer in good condition                          50,000

 Items in the shipping department                                                                                     251,766

 Items in the warehouse                                                                                                    376,598

 Items included in count, damaged and unsalable                                                              43,330

 Items included in the count, but segregated  per sales contract with a client                  132,860

 Items on counter for sale                                                                                                  844,412

 Items ordered from a supplier in Manila and in the receiving department                       465,321

 Items ordered, invoice received but goods not received. 

Freight is on account of seller.   376,018

 Items shipped today, invoice mailed, FOB destination                                                    150,000

 Items shipped today, invoice mailed, FOB shipping point                                               255,432

What is the correct amount of inventory? P 2,389,089

Solution:

Items currently being used for window display                                                                 294,322

 Items in the receiving dock, returned by the customer in good condition                          50,000

 Items in the shipping department                                                                                     251,766

 Items in the warehouse                                                                                                    376,598

 Items included in count, damaged and unsalable                                                            (43,330)

 Items included in the count, but segregated per sales contract with a client                (132,860)

 Items on counter for sale                                                                                                  844,412

 Items ordered from a supplier in Manila and in the receiving department                       465,321

 Items shipped today, invoice mailed, FOB destination                                                    150,000

Correct inventory P 2,389,089

Finished goods in storeroom, at cost, including overhead of P400,000 or 20%              2,000,000

 Finished goods in transit, including freight charge of P20,000, FOB shipping point        250,000

 Finished goods held by salesman, at selling price, cost, P100,000                                 140,000

 Goods in process, at cost of materials and direct labor                                             720,000

 Raw materials                                                                                                              1,000,000

 Raw materials in transit, FOB destination                                                                       50,000

 Defective materials returned to suppliers                                                                       100,000

 Shipping supplies                                                                                                             20,000

 Gasoline and oil for testing finished goods                                                                   110,000

 Machine lubricants                                                                                                           60,000

What is the correct amount of inventory? P 3,990,000

Solution:

Finished goods in storeroom, at cost, including overhead of P400,000 or 20%              2,000,000

  Finished goods held by salesman, at selling price, cost, P100,000                               100,000

Goods in process, at cost of materials and direct labor                                     720,000

Raw materials                                                                                                              1,000,000

Gasoline and oil for testing finished goods                                                                   110,000

Machine lubricants                                                                                                           60,000

Correct inventory P 3,990,000

Rose Inc. reported total assets of P1,200,000 and net income of P135,000 for the current year.
Rose determined that inventory was overstated by P10,000 at the beginning of the year (this
was not corrected). Determine the corrected amount for the year of the following:

1. Total assets P 1,200,000

2. Net income P 145,000

Solution:
135,000 +10,000 = P 145,000