Reference no: EM132994296

Question - On May 15, 2020, Cherry Company received a shipment of merchandise with a selling price of P100,000 from Pie Company. The consigned goods cost Pie Company P70,000 and freight charges of P5,000 had been paid to ship the goods to Cherry Company. The consignment arrangement provided for a sale of merchandise on credit with terms of 2/10, n/30. The 15% commission is to be based on the gross accounts receivable collected by the consignee. Cash discounts taken by customers, expenses applicable to goods on consignment and any form of cash advanced to the consignor are deductible from the remittance by the consignee.

Cherry Company advanced P10,000 to Pie Company upon receipt of the shipment. An expense related to sold units of P3,500 was paid by Cherry. By June 2020, 80% of the shipment had been sold, and 90% of the resulting accounts receivable had been collected, all within the discount period. Remittance was made on June 30, 2020.

Required -

1. Determine the amount remitted by Cherry to Pie on June 30, 2020?

2. Determine the net profit on consignment?

3. Determine the inventory on consignment?