Reference no: EM132858959

Pau Company has adjusted and closed its books at the end of 2020. The company arrives at its ending inventory position of Php2,000,000 by a physical count taken on December 31 of each year. The following are other data as December 31, 2020:

Net sales Php 4,000,000

Cost of sales 2,200,000

Net income 800,000

Retained earnings after closing

Net income of Php400,000 6,000,000

During the audit, the following errors were discovered:

a. Merchandise which cost Php100,000 was sold for Php128,000 on December 28, 2020. The order was shipped on December 31, 2020 with terms FOB shipping point. The merchandise was not included in the ending inventory. The sale was recorded on January 10, 2021 when the customer made payment on the sale.

b. Merchandise costing Php38,000, located in a separate warehouse, was overlooked and excluded from the 2020 inventory count.

c. On December 27, 2020, Pau Company purchased merchandise from a supplier costing Php47,000. The order was shipped December 29 (terms FOB destination) and was still "in transit" on December 31. Since the invoice was received on December 31, the purchase was recorded in 2020. The merchandise was not included in the inventory count.

d. The client included in its 2020 ending inventory a merchandise costing Php51,600. This merchandise had been custom-built and was being held until the customer could come and pick up the merchandise. The sale for Php57,000 was recorded in 2021.

Required:

Answer the following:

Question 1. Compute for the adjusted balance of ending inventory as of December 31, 2020.

Question 2. Compute for the adjusted balance of Net sales , 12/31/2020.

Question 3. Compute for the adjusted balance of cost of sales, 12/31/2020

Question 4. Compute for the adjusted balance of Net Income, 12/31/2020.

Question 5. Compute for the adjusted balance of the retained earnings, 12/31/2020.