Reference no: EM132962108

Problem - CNN Company provided service contracts to customers for maintenance of their electrical system. On October 1, 2020, the entity agreed to a 4-year contract with a major customer for P1,540,000. Costs over the period of the contract are reliable estimated at P513,330. What amount of revenue should be recognized for the year ended December 31, 2020?

Debra Company had sales of P5,000,000 during December 2020. Experience had shown that merchandise equaling 7% of sales will be returned within 30 days and an additional 3% will be returned within 90 days. Returned merchandise is readily resalable. In addition, merchandise equaling 15% of sales will be exchanged for merchandise of equal or greater value. What amount should be reported for net sales in the income statement for the month of December 2020?

A physical count on December 31, 2020 revealed that Fauci Company had inventory with a cost of P4,410,000. The audit identified that the following items were excluded from this amount:

Merchandise of P610,000 is held by Fauci on consignment.

Merchandise costing P380,000 was shipped by Fauci FOB destination to a customer on Dec. 31, 2020. The customer was expected to receive the goods on Jan 5, 2021.

Merchandise costing P460,000 was shipped by Fauci FOB shipping point to a customer on Dec 29, 2020. The customer was expected to receive the goods on Jan 5, 2021.

Merchandise costing P830,000 shipped by a vendor FOB destination on Dec 31, 2020 was receive on Jan 5, 2021.

Merchandise costing P510,000 purchased FOB shipping point was shipped by the supplier on Dec 31, 2020 and received by Fauci on Jan 5, 2021.

What is the correct amount of inventory on Dec 31, 2020?