This Study Resource Was: PAS 2 Inventories
This Study Resource Was: PAS 2 Inventories
This Study Resource Was: PAS 2 Inventories
PAS 2 Inventories
QUIZ:
3. How should trade discounts be dealt with when valuing inventories at the lower of
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cost and net realisable value (NRV) according to PAS 2?
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a. Added to cost
b. Ignored
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eH w
c. Deducted in arriving at NRV
d. Deducted from cost
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4. The cost of inventory should not include
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I. Purchase price.
II. Import duties and other taxes.
III. Abnormal amounts of wasted materials.
IV. Administrative overhead.
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5. The Coronet Company has a cost card in relation to an item of goods manufactured
as follows:
Materials 70
Storage costs of finished goods 18
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b. 76
c. 98
d. 94
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Unit
Date Transaction Units Total cost
cost
Beginning
Feb. 1 100 ₱15 ₱1,500
inventory
7 Purchase 300 18 5,400
12 Sale 320
21 Purchase 200 21 4,200
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8. How much is the ending inventory under the FIFO cost formula?
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a. 6,540
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b. 5,840
c. 5,640
o.
d. 4,860
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9. How much is the ending inventory under the Weighted Average cost formula? (The
average is calculated on a periodic basis.)
a. 5,180
b. 5,280
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c. 5,460
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d. 5,580
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10. How much is the ending inventory under the Weighted Average cost formula?
(The average is calculated as each additional purchase is made, i.e., ‘moving
average’.)
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a. 5,860
b. 5,680
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c. 5,580
d. 5,380
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“Be strong and courageous. Do not fear of be in dread of them, for it is the Lord your God
who goes with you. He will not leave you or forsake you.” (Deuteronomy 31:6)
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- END -
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SOLUTIONS:
5. B 70 + 6 = 76
8. C Solution:
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7 Purchase 300
12 Sale (320)
21 Purchase 200
Ending inventory (in units) 280
9. A Solution:
Formula:
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Total goods available for sale (TGAS) in
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Weighted pesos
=
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ave. cost Total goods available for sale (TGAS) in
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units
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Weighted average unit cost = ₱11,100 ÷ 600 = ₱18.50
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Ending inventory (in units) - see computation
above 280
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10. C Solution:
(a)
Moving ave. cost = TGAS at cost ÷ TGAS in units
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Cost of sales = 320 units sold x ₱11.50 moving ave. cost = ₱5,520
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