Reference no: EM132613019

Question - On December 31, 2020, a fire destroyed most of the merchandise inventory of an entity. All goods were completely destroyed except for partially damaged goods that normally sell for P100,000 and that had an estimated net realizable value of P25,000 and undamaged goods that normally sell for P300,000.

Inventory, January 1, 2020 600,000 Net purchases for 2020 4,300,000 Net sales for 2020 5,600,000 Total 2019 2018 2017 Net sales 9,000,000 5,000,000 3,000,000 1,000,000 Cost of goods sold 6,750,000 3,840,000 2,200,000 710,000 Gross income 2,250,000 1,160,000 800,000 290,000

What is the estimated amount of fire loss on December 31, 2020?

a. 700,000

b. 675,000

c. 450,000

d. 400,000