PROBLEM 17

On January 15, 2020, a strong monsoon hit the country and destroyed all the inventory of Aeirron Company stored in the warehouse. The following information is available from the records of the company's periodic inventory system:

Beginning inventory P1,000,000

Purchases, January 1 to January 15, 2020 500,000

Sales, January 1 to January 15, 2020 800,000

The following are the past performance of Aeirron Company:

2019 2018

Sales P4,500,000 P4,100,000

Cost of Sales 2,300,000 2,500,000

Requirements:

1. Compute the gross profit rate of the company for the past years.

2. Compute the inventory lost in monsoon.

PROBLEM 19

(AICPA adapted) On April 30, 2020, a fire damaged the office of Bianca Company. The following balances were gathered from the general ledger on March 31, 2020:

Accounts Receivable P1,050,000

Inventory - January 1 2,100,000

Accounts Payable 800,000 Sales 4,000,000

Purchases 2,000,000 Additional information:

a. An examination of the April bank statement and canceled checks revealed checks written during April 1-30 as follows:

Accounts payable as of March 31 P300,000

April merchandise shipments 120,000

Expenses 190,000

Deposits during the same period amounted to P500,000, which consisted of collections from customers with the exception of a P50,000 refund from a vendor for merchandise returned in April.

b. Customers acknowledged the indebtedness of P1,100,000 on April 30. Customers owned another P60,000 that will never be recovered. Of the acknowledged indebtedness, P55,000 may prove uncollectible.

c. Correspondence from the suppliers revealed unrecorded obligations on April 30, of P410,000 for April merchandise shipment, including P60,000 for shipments in transit on that date.

d. The average gross profit rate is 40%.

e. Inventory with a cost of P300,000 was salvaged and sold for P150,000. The balance of the inventory was a total loss.

Requirements: Compute the following accounts

1. Purchases

2. Sales

3. Estimated Ending Inventory

4. Inventory Loss