Reference no: EM132593093

On July 1, 2020, the AC Company established a sales agency in Quezon City, sending samples of its merchandise amounting to P14,000 and a working fund amounting to P120,000 to be maintained on the imprest basis. The samples sent were intended to last until March 1, 2021. During the first two months of operations, the agency transmitted to the home office sale of goods in the amount of P486,000, but the home office were not able to fill-up 25% of the said transmitted sales orders. Collections from customers amounted to P123,235, net of 2% sales discount. Payments made by the agency during July and August were as follows: annual rent of P96,000, advertising expense worth P25,000 and utilities amounting to P30,000. It also purchased an equipment worth P30,000 which will be depreciated at 20% per annum The gross profit rate on sales agency order is 25% of sales.

Question 1: Net income of the agency for the two months ended August 31, 2020 is?