Reference no: EM132779794

As of May 31, 2019, Company A's fiscal year-end date, its records carried the following balances:

Inventory - P6,500,000

Accounts Payable - P4,300,000

Net Sales - P12,030,000

Net Purchases - P8,670,000

Net Income - P2,000,850

Consider the following information:

1. Merchandise costing P450,000 had been recorded as a purchase but not included as inventory. These were shipped FOB shipping point based on the supplier's invoice received May 31, 2019.
2. Goods in transit, with terms FOB shipping point were included in the inventory count but no entry was made for the purchase. The goods amounted to P350,000.
3. Goods costing P250,000 and selling for P460,000 have been segregated in the warehouse, but not yet shipped as of May 31, 2019. Sales has not been recorded for this. The purchase order stated FOB destination as shipping terms.
4. On May 31, 2019, the Company shipped goods costing P430,000 and had a selling price of P580,200, FOB point of shipment. The transaction was recorded as sales. The cost was still included in the inventory.
5. Goods costing P150,000 was out on consignment with Consignee Company. Upon receipt of Consignee Company's statement that these goods were on hand, these items were excluded from Company A's inventory and invoiced on May 31 at P267,000.
6. Materials costing P480,000 and billed on May 29 at a selling price of P721,000, had been segregated in the warehouse for shipment to a customer. The materials had been excluded from inventory as a signed purchase order has been received from the customer. The terms of the shipment was FOB destination.
7. Goods in transit, shipped FOB destination by a supplier, in the amount of P250,000, had been excluded from the inventory, and further testing revealed that the purchase had been recorded.
8. Goods costing P150,000 had been received, included in inventory, and recorded as a purchase. However, the goods were found to be defective and would be immediately returned.

Problem 1: Determine adjusted balances of:

1. Inventory
2. Accounts Payable
3. Net Sales
4. Net Purchases
5. Net Income