Based on the year-end count of your client, Pasado Corporation, conducted last December 31, 2018, the ending inventory is P2,750,000. However, possible theft of inventories is suspected. To check the reasonableness of the ending inventory, you estimated your client's ending inventory using retail inventory method. The following information related to your client's ending inventory are as follows: Cost Retail Inventory, January 1, 2018 1,945,500 4,624,800 Purchases 11,268,950 20,561,500 Purchase returns 460,500 752,300 Purchase discounts 265,000 Freight in 178,900 Departmental transfer in 1,125,500 1,865.200 Departmental transfer out 800,000 1,550,000 Normal breakages 250,450 Sales 18,562,900 Sales discounts 1,450,000 Sales returns 567,890 Discounts granted to employees 244,000 Mark up 1,500,000 Mark up cancellation 300,000 Mark down 1,400,000 Mark down cancellation 100,000 During the year, inventories with total selling price of P349,500 (total cost is P196,000) were damaged and are considered unsellable