Note: For numerical requirements, solutions must be in good accounting form

Problem 13-8 (AICPA Adapted) On September 30, 2020, a fire destroyed most of the merchandise inventory of Paragon Company. All goods were completely destroyed except for partially damaged goods that normally sell for P100,000 and that had an estimated net realizable value of P25,000 and undamaged goods that normally sell for P60,000. Inventory - January 1, 2020 660,000 Net purchases, January 1 through September 30, 2020 4,240,000 Net sales, January 1 through September 30, 2020 5,600,000 2019 2018 2017 Net sales Cost of goods sold 5,000,000 3,840,000 3,000,000 2,200,000 1,000,000 710,000 (A) P13-8 (Pg. 372): Use the problem (Paragon Company), compute for the requirements. Use the following as a foundation to your solution: In Peso Amounts In 2020 2017 2018 2019 Total Percent Sales Less: Cost of Sales Gross Profit 1. What is the gross profit rate on cost (write in percent with two decimal places, e.g. 42.77 for 42.77%)? Note: Kindly rewrite the gross profit rate. Double rule and encircle accordingly. 2. What is the amount of fire loss to be recognized on September 30, 2020? a. P700,000 b. P615,000 c. P630,000 d. P580,000 *Note: Make sure to compute for the cost of the undamaged goods