Reference no: EM132918669

Paul, Inc., agrees to transfer television sets to Walker Bros. on a consignment basis. The consignee is to sell a set at 40% above cost exclusive of freight and is to receive a 10% commission on sales price. The consignor agrees to reimburse the consignee for all expenses related to the consignment. The agreement also calls for an advance payment by the consignee of 30% per set based on selling price; the said advance is to be deducted as settlement is made for each set sold. The consignee is to provide an account sale quarterly and is to make cash remittance for the amount owed at that time.

The following consignment sales activities occurred during the October 1 to December 31 of current year:

• Sets shipped - 100; Unit cost each set -P 10,000; Freight charges on the shipment paid by the consignor - P 75,000; The consignee made advance payments on the sets received; Advertising cost paid by the consignee - P50,000
• The consignee sold 80 sets for cash; expenses of delivery and installation were P 25,000. After notifying the consignor with the total sets sold for the period, the consignee returned 10 sets representing a model that could not be sold and paid freight charges of P 8,000 on the return.

Required:

Problem 1. Net income by the consignor as a result of the above transactions.

Problem 2. The amount remitted by the consignee.