Reference no: EM132612998
Question - An entity reported the following information for the current year:
Inventory, January 1 5,000,000
Purchases 36,000,000
Freight in 2,000,000
Purchase returns and allowances 3,500,000
Purchase discounts 1,500,000
Sales 43,000,000
Sales returns 3,000,000
Sales discounts 1,000,000
A physical inventory taken at year-end resulted in an ending inventory of P3,000,000. At year-end, unsold goods out on consignment with selling price of P 1,000,000 are in the hands of a consignee. The gross profit was 25% on cost. What is the estimated cost of inventory shortage?
a. 2,000,000
b. 3,000,000
c. 2,200,000
d. 4,250,000