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    Inventory Writedown

    Uploaded by

    Art Aldrian

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Inventory Writedown

    Uploaded by

    Art Aldrian
    10 views5 pages

    Original Title

    Inventory-Writedown

    Copyright

    © © All Rights Reserved

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    PDF, TXT or read online from Scribd

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    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    10 views5 pages

    Inventory Writedown

    Uploaded by

    Art Aldrian

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 5

    DIRECT METHOD

    December 31, 2024:

    Beg. Inventory 7,850,000


    Net purchases 30,000,000
    TGAS 37, 850,000
    Ending inventory (8,400,000)
    Cost of goods sold 29,450,000

    December 31, 2025:

    Beg. Inventory 8,400,000


    Net purchases 28,000,000
    TGAS 36,400,000
    Ending inventory (8,450,000)
    Cost of goods sold 27,950,000

    JOURNAL ENTRIES: (at NRV)

    Dec. 31, 2023 Inventory – December 31, 2023 7,850,000


    Income summary 7,850,000

    Dec. 31, 2024 Inventory – December 31, 2024 8,400,000


    Income summary 8,400,000

    Dec. 31, 2025 Inventory – December 31, 2025 8,450,000


    Income summary 8,450,000

    ALLOWANCE METHOD

    December 31, 2024:

    Beg. Inventory @ cost 8,000,000


    Net purchases 30,000,000
    TGAS 38,000,000
    End. Inventory @ cost (8,600,000)
    Cost of goods sold 29,400,000
    Loss on IW 50,000
    Adjusted cost of goods sold 29,450,000

    Allowance for inventory writedown – 12/31/2024 (8,600,000 – 8,400,000) 200,000


    Allowance for inventory writedown – 12/31/2023 (8,000,000 – 7,850,000) 150,000
    Loss on inventory writedown – 12/31/2024 50,000

    December 31, 2025:

    Beg. Inventory @ cost 8,6000,000


    Net purchases 28,000,000
    TGAS 36,600,000
    End. Inventory @ cost (8,550,000)
    Cost of goods sold 28,050,000
    Gain on reversal of IW (. 100,000)
    Adjusted cost of goods sold 27,950,000

    Allowance for inventory writedown – 12/31/2025 (8,550,000 – 8,450,000) 100,000


    Allowance for inventory writedown – 12/31/2024 (8,600,000 – 8,400,000) 200,000
    Gain on reversal of inventory writedown – 12/31/2025 100,000

    JOURNAL ENTRIES: (at COST)

    Dec. 31, 2023 Inventory – December 31, 2023 8,000,000


    Income summary 8,000,000

    Loss on inventory writedown 150,000


    Allow. for inventory writedown 150,000

    Dec. 31, 2024 Inventory – December 31, 2024 8,400,000


    Income summary 8,400,000

    Loss on inventory writedown 50,000


    Allow. for inventory writedown 50,000

    Dec. 31, 2025 Inventory – December 31, 2025 8,450,000


    Income summary 8,450,000

    Allow. for inventory writedown 100,000


    Gain on reversal of inv. Writedown 100,000
    ILLUSTRATION 2:

    Allowance for inventory writedown – 12/31/2023 (2,400,000 – 2,240,000) 160,000


    Allowance for inventory writedown – 1/1/2023 0
    Loss on inventory writedown – 12/31/2023 160,000

    Beginning inventory 2,300,000


    Net purchases 8,000,000
    Total goods available for sale 10,300,000
    Ending inventory (2,240,000)
    Cost of goods sold – 2023 8,060,000

    Beginning inventory @ cost 2,300,000


    Net purchases 8,000,000
    Total goods available for sale 10,300,000
    Ending inventory (2,400,000)
    Cost of goods sold – 2023 7,900,000
    Loss on inventory writedwon – 2023 160,000
    Adjusted cost of goods sold – 2023 8,060,000

    Allowance for inventory writedown – 12/31/2024 0


    Allowance for inventory writedown – 12/31/2023 160,000
    Gain on reversal of inventory writedown – 2024 (160,000)

    Beginning inventory 2,240,000


    Net purchases 9,800,000
    Total goods available for sale 12,040,000
    Ending inventory (2,600,000)
    Cost of goods sold – 2024 9,440,000

    Beginning inventory 2,400,000


    Net purchases 9,800,000
    Total goods available for sale 12,200,000
    Ending inventory (2,600,000)
    Cost of goods sold – 2024 9,600,000
    Gain on reversal of IW – 2024 (. 160,000)
    Adjusted cost of goods sold – 2024 9,440,000
    FIFO:

    October 1 Beg. Inventory 1,300


    October 3 Purchases 3,400
    October 6 Sales (1,800)
    October 10 Sales (1,900)
    October 14 Purchases 2,000
    October 16 Purchases 1,300
    October 20 Sales (2,200)
    Ending inventory 2,100

    Oct. 16 Purchases 1,300 x 144 = 187,200


    Oct. 14 Purchases 800 x 142 = 113,600
    Ending inventory cost 300,800

    Sales (378,000 + 387,600 + 453,200) 1,218,800


    Cost of goods sold:
    Beg. Inventory (1,300 x 145) 188,500
    Purchases 974,400
    TGAS 1,162,900
    Ending inventory (300,800) (862,100)
    Gross Profit 356,700

    Weighted average – Periodic:

    Weighted Average unit cost = TGAS in pesos / TGAS in units


    = 1,162,900 / 8,000
    = 145.36

    October 1 Beg. Inventory 1,300


    October 3 Purchases 3,400
    October 14 Purchases 2,000
    October 16 Purchases 1,300
    TGAS (units) 8,000

    Ending inventory = 2,100 units x 145.36


    = 305,256

    Sales (378,000 + 387,600 + 453,200) 1,218,800


    Cost of goods sold:
    Beg. Inventory (1,300 x 145) 188,500
    Purchases 974,400
    TGAS 1,162,900
    Ending inventory (305,256) (857,644)
    Gross Profit 361,156
    Weighted average – Perpetual:

    Oct. 1 Beg. inventory 1,300 145 188,500


    Oct. 3 Purchases 3,400 148 503,200
    4,700 147.17 691,700
    Oct. 6 Sales (1,800) 147.17 (264,906)
    2,900 147.17 426,794
    Oct. 10 Sales (1,900) 147.17 (279,623)
    1,000 147.17 147,171
    Oct. 14 Purchases 2,000 142 284,000
    3,000 143.72 431,171
    Oct. 16 Purchases 1,300 144 187,200
    4,300 143.81 618,371
    Oct. 20 Sales (2,200) 143.81 (316,382)
    Ending inventory 2,100 143.81 301,989

    Sales (378,000 + 387,600 + 453,200) 1,218,800


    Cost of goods sold (264,906 + 279,623 + 316,382) (860,911)
    Gross Profit 357,889

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