What is the correct ending inventory balance

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Q1. On August 31, a flood at Lordgin Company's only warehouse caused severe damage to its entire inventory. Based on recent history, Lordgin has a gross profit of 25 percent of net sales. The following information is available from Lordgin's records for the eight months ended August 31: Inventory, January 1 P520,000; Net Purchases 4,060,000; Net Sales 5,200,000. A physical inventory disclosed usable damaged goods which Lordgin estimates can be sold for P70,000. Using the gross profit method, the estimated cost of goods sold for the eight months ended August 31 should be

a. P4,200,000.

b. P3,830,000

c. P3,900,000

d. P680,000

Q2. Hardy Company is a wholesale electronics distributor. On December 31, 2020, it prepared the following partial income statement: Inventory, January 1 P 200,000; Net Purchases 300,000; Net Sales 600,000.Given this information, if Hardy Company's gross margin is 30 percent of net sales, what is the correct ending inventory balance?

a. P180,000

b. P80,000

c. P120,000

d. P500,000

Reference no: EM133075756

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