2101 NOTES
Chapter 11 - cost flow of inventory
Compute the COGS, ending inventory
Periodic/Perpetual method:
FIFO
Weighted average
LIFO (last in first out) - only applicable in US (US GAAP)
Problem 11-1
1. Compute total units sold (8,000)
2. Compute total units, ending inventory (4,500) pila akong gi purchase minus pila ang
nahalin
FIFO PERIODIC
Kung unsay una nimo gipalit, mao nay una nimo gibaligya
Jan 1 BG 6000 X 150 900,000 1,300,000 COGS
5 Pur 2000 x 200 400,000
20 PUR 2500 X 300 750,000 1,550,000 COEI
25 PUR 2000 X 400 800,000
FIFO PERPETUAL
Amounts of COGS and COEI will be the same as FIFO PERIODIC
Process differs, pero ang result is the same
WEIGHTED AVERAGE PERIODIC
weighted average unit cost = TGAS in pesos/TGAS in units
TGAS = BG + PUR - PUR RETURN
COEI = EI (units) x weighted average unit cost
COGS = units sold x WA unit cost
WEIGHTED AVERAGE PERPETUAL
Arrange by date
Unit cost divide by no. of units
, After every purchase, compute new unit cost
Jan 1 BG 6000 X 150 900,000
5 PUR 2000 X 200 400,000
Bal 8000 1,300,000
Jan 10 sale (4000 x 162.50) (650,000)
BAL 4000 650,000
JAN 15 sale (1000 x 162.50) (162,500)
Bal 3000 487,500
Jan 20 pur 2500 x 300 750,000
Bal 5500 x 225 1,237,500
Jan 25 pur 2000 X 400 800 000
BAL 7500 X 271.67 2037500
JAN 31 SALE (3000 X 271.67) (815,0100
BAL 4500 1222490 COEI
COGS = 1627510 (Add all sales)
CHAPTER 12 - LCNRV (Lower of Cost and Net Realizable Value)
NRV = Est selling price - est cost to complete - est cost of disposal
You cannot record asset more than its fair value (selling price sa market)
Fair value and NRV is not the same
When can u recognize an impairment or loss on inventory = if cost is lower than nrv, there is no
inv writedown. If nrv is lower than cost, there is inv writedown.
Loss on inv writedown (makita sa income statement) = add
Allowance on inv writedown (naa sa balance statement) = deduct (contra asset)
Problem 12-9
PAS 2, inv should be per item
Cost of inv = material and conversion cost
Reversal of allowance, 100 000 ang limit. If mag reverse, GAIN ON REVERSAL ang acct title
Historical cost = purchase price (cost)
Probleb 12-12
Nov. 15 - date of contract, no journal entry
310 - contract price
Chapter 11 - cost flow of inventory
Compute the COGS, ending inventory
Periodic/Perpetual method:
FIFO
Weighted average
LIFO (last in first out) - only applicable in US (US GAAP)
Problem 11-1
1. Compute total units sold (8,000)
2. Compute total units, ending inventory (4,500) pila akong gi purchase minus pila ang
nahalin
FIFO PERIODIC
Kung unsay una nimo gipalit, mao nay una nimo gibaligya
Jan 1 BG 6000 X 150 900,000 1,300,000 COGS
5 Pur 2000 x 200 400,000
20 PUR 2500 X 300 750,000 1,550,000 COEI
25 PUR 2000 X 400 800,000
FIFO PERPETUAL
Amounts of COGS and COEI will be the same as FIFO PERIODIC
Process differs, pero ang result is the same
WEIGHTED AVERAGE PERIODIC
weighted average unit cost = TGAS in pesos/TGAS in units
TGAS = BG + PUR - PUR RETURN
COEI = EI (units) x weighted average unit cost
COGS = units sold x WA unit cost
WEIGHTED AVERAGE PERPETUAL
Arrange by date
Unit cost divide by no. of units
, After every purchase, compute new unit cost
Jan 1 BG 6000 X 150 900,000
5 PUR 2000 X 200 400,000
Bal 8000 1,300,000
Jan 10 sale (4000 x 162.50) (650,000)
BAL 4000 650,000
JAN 15 sale (1000 x 162.50) (162,500)
Bal 3000 487,500
Jan 20 pur 2500 x 300 750,000
Bal 5500 x 225 1,237,500
Jan 25 pur 2000 X 400 800 000
BAL 7500 X 271.67 2037500
JAN 31 SALE (3000 X 271.67) (815,0100
BAL 4500 1222490 COEI
COGS = 1627510 (Add all sales)
CHAPTER 12 - LCNRV (Lower of Cost and Net Realizable Value)
NRV = Est selling price - est cost to complete - est cost of disposal
You cannot record asset more than its fair value (selling price sa market)
Fair value and NRV is not the same
When can u recognize an impairment or loss on inventory = if cost is lower than nrv, there is no
inv writedown. If nrv is lower than cost, there is inv writedown.
Loss on inv writedown (makita sa income statement) = add
Allowance on inv writedown (naa sa balance statement) = deduct (contra asset)
Problem 12-9
PAS 2, inv should be per item
Cost of inv = material and conversion cost
Reversal of allowance, 100 000 ang limit. If mag reverse, GAIN ON REVERSAL ang acct title
Historical cost = purchase price (cost)
Probleb 12-12
Nov. 15 - date of contract, no journal entry
310 - contract price
