Intermediate Accounting - Show Complete Solution and Explain:

Question 1

For items 1 to 2

Monday Company sold a plot of land that had originally cost P800,000 on January 1, 2021. As payment, the company received a P1,200,000 note. It has a 4% interest rate and is payable in three annual installments of P400,000 plus interest on the outstanding amount. 10% is the prevailing rate of interest on this note. The following present value factors of 1 at 10% are shown in the present value table:

Present value factor of 1 for 3 periods 0.75132 Present value factor of 1 for 2 periods 0.82645 Present value factor of 1 for 1 period 0.90909 Present value of an ordinary annuity of 1 for 3 periods 2.48685COST RETAIL Beginning Inventory P1,987,200 P2,760,000 Sales 7,812,000 Purchases 4,688,640 6,512,000 Freight in 94,560 Mark ups 720,000 Mark up cancellations 120,000 Markdown 240,000 Markdown cancellations 40,000Historical Cost P5,000,000 Estimated Selling Price 4,500,000 Expected Selling Price 4,700,000 Cost to Complete and Sell 250,000 Replacement Cost 4,000,000Units Unit Cost Total Cost Balance at January 1 3,000 P9.77 P29,310 Purchases: January 6 2,000 10.30 20,600 January 26 2,700 10.71 28,917 Sales: January 7 (2,500) January 31 (4,300) Balance at January 31 9002020 2021 Inventory, Jan. 1 PO P204,000 Purchases 860,000 692,000 Purchase returns and allowances 46,120 64,600 Sales 788,000 836,000 Sales returns and allowances 16,000 20,000Freight-in P30,000 Purchase returns 75,000 Selling expenses 200,000 Ending inventory 260,000