Glenn Corporation sells electronic gadgets. In your audit of the company's financial statements for the years ended
Question:
Glenn Corporation sells electronic gadgets. In your audit of the company's financial statements for the years ended December 31, 2021, you have gathered the following data concerning inventory. At December 31, 2020, the balance of the inventory account was P451,800, and the allowance for inventory write-down had a balance of P28,800. The relevant inventory cost and market data at December 31, 2021, are summarized below:
Cost | Sales Price | NRV | Normal Profit | |
---|---|---|---|---|
Gadget A | P80,100 | P82,350 | P78,300 | P5,760 |
Gadget B | 84,600 | 83,700 | 76,500 | 6,696 |
Gadget C | 112,500 | 116,100 | 99,900 | 10,449 |
Gadget D | 174,600 | 184,500 | 177,300 | 18,450 |
Total | P451,800 | P466,650 | P432,000 | P41,355 |
The company estimated the cost to sell at 10% of the selling price of each of the gadgets.
Questions:
1. Compute the correct amount of inventory to be reported at December 31, 2021.
2. Prepare the necessary adjusting entry, if any, to reflect the correct amount of inventory at December 31, 2021.
Principles of Accounting
ISBN: 978-1133626985
12th edition
Authors: Belverd E. Needles, Marian Powers and Susan V. Crosson