What is the estimated cost of inventory shortage

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Reference no: EM132613427

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

Question 1: 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?

Option a. 2,000,000

Option b. 3,000,000

Option c. 2,200,000

Option d. 4,250,000

Reference no: EM132613427

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