Reference no: EM133041782

Problem - Croatia Company conducted a physical count on December 31, 2020 which revealed merchandise with a total cost of P5,800,000. However, further investigation revealed that the following items were excluded from the count.

Goods sold to a customer which are being held for the customer's convenience with a cost of P200,000.

A packing case containing a product costing P500,000 was standing in the shipping room when the physical inventory was taken. The product was not included in the inventory because it was marked "HOLD FOR SHIPPING INSTRUCTIONS". The investigation revealed that the customer's order was dated December 28, 2020, but the case was shipped and the customer billed on January 5, 2021.

A special machine costing P250,000 fabricated to order for a customer was finished and specifically segregated at the back part of the shipping room on December 31, 2020. The customer was billed on that date and the machine was excluded from inventory although it was shipped on January 5, 2021.

Goods in process costing P300,000 held by an outside processor for further processing.

Goods costing P50,000 shipped by a vendor FOB seller on December 31, 2020 and received by the entity on January 10, 2021.

Required - What is the correct amount of inventory that should be reported on December 31, 2020?