Question

In: Accounting

Grass Company’s inventory at December 31, 2021 was P570,000 based on a physical count of goods priced at cost and before any necessary year-end adjustments relating to the following:

Grass Company’s inventory at December 31, 2021 was P570,000 based on a physical count of goods priced at cost and before any necessary year-end adjustments relating to the following:

• Included in the physical count were goods billed to a customer FOB shipping point on December 31, 2p016. These goods had a cost of P15,000 and were picked up by a carrier on January 10, 2022.

• Goods shipped FOB shipping point on December 28, 2021 from a vendor to Grass Company were received on January 4, 2022. The invoice cost was P25,000.

• Goods shipped from Grass Company to a customer, terms FOB destination, are still in transit at December 31,2 016. The goods, with a selling price of P120,500, were received by the customer on January 5, 2022. The company sells goods at a 25% markup cost. 

What amount should Grass Company report as inventory in its December 31, 2021 statement of financial position? 

Solutions

Expert Solution

C. Grass Company  
   
Inventory - Physical count  ₱           570,000.00
FOB Shipping Point billed to customer  ₱            25,000.00
FOB Destination in transit (125,500/1.25)  ₱            96,400.00
Adjusted Inventory  ₱           691,400.00

• Included in the physical count were goods billed to a customer FOB shipping point on December 31, 2p016. These goods had a cost of P15,000 and were picked up by a carrier on January 10, 2022. (this is not included in the computation)


 

The Adjusted Inventory is 

 ₱           691,400.00 

 

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