At the beginning of the year, Neo Company reported inventory of P1,000,000 at retails and P560,000 at cost. During the current year, the entity registered the following purchases (see photo below). The net sales totaled P5,800,000. The following reductions were made in the retail price: To meet price competition P60,000. To dispose of overstock P85,000. Miscellaneous reductions P100,000. During the current year, the selling price of a certain inventory increased from P200 to P300. This additional markup applied to 5,000 items, but was later on cancelled on the remaining 1,000 items.

What is the ending inventory using the FIFO cost approach in applying the retail method?

a. P942,424

b. P978,757

c. P349,331

d. P336,364

Cost Retail Price Original mark up 4,000,000 6,200,000 2,200,000 Cost Retail Price Original mark up 4,000,000 6,200,000 2,200,000