Operating Activities $($Periodic System of Inventory is used, Discounts accounted for using the net method; VAT at $12\%$ of gross sales$)$

$5.$ Purchased merchandise from VAT$-$registered supplier, $P1,500,000,\frac{2}{30},\frac{n}{60}.$ A downpayment of $P935,000$ was made, the balance to be paid at a later date.

$6.$ Paid $P10,000$ freight for merchandise purchased, FOB shipping point, collect.

$7.$ Sold merchandise, $P2,000,000$ before value$-$added tax. Terms: $2/30,$ n$/45.$

$8.$ Paid $P20,000$ freight of merchandise sold, FOB Destination prepaid.

$9.$ Sold merchandise with a list price of $P500,000.$ Trade discounts: $10,5$; COD, before value$-$added tax.

$10.$ Refunded customer after receipt of $P85,500$ sales returns due to defect. This was part of sales in number $9,$ net of trade discounts.

$11.$ Collected $80\%$ on credit sales plus VAT in number $7$ within $30$ days from invoice date. The remaining $20\%$ was not yet collected after $30$ days from invoice date. Cash discount applied on paid portion within discount period.

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