Question
Mariot Company reported income before tax of P3,700,000 for 2013 and P5,200,000 for 2014. An audit produced the following information: a. The ending inventory for
Mariot Company reported income before tax of P3,700,000 for 2013 and P5,200,000 for 2014. An audit produced the following information: a. The ending inventory for 2013 included 5,000 units erroneously priced at P59 per unit. The correct cost was P95 per unit. b. Merchandise costing P175,000 was shipped to Mariot Company, FOB shipping point, on December 26, 2013. The purchase was recorded in 2013, but the merchandise was excluded from the ending inventory because it was not received until January 4, 2014. c. On December 28, 2013, merchandise costing P30,000 was sold to Deluxe Company. Deluxe had asked Mariot in writing to keep the merchandise until January 2, 2014. The merchandise was included in the inventory count. The sale was correctly recorded in December 2013. d. Gray Company sold merchandise costing P15,000 to Mariot Company. The purchase was made on December 29, 2013 and the merchandise was shipped on December 30, 2013. Terms were FOB shipping point. Because the bookkeeper was on vacation, neither the purchase nor the receipt of goods was recorded until January 2014? What is the corrected income before tax for 2014?
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