Questions 1 & 2 are based on the following information. On February 14, 2012, Therese Company established a sales agency in Tagbilaran. Upon establishment of the sales agency, the home office sent samples costing P8,000 and a working fund of P3,000 to be maintained on the imprest basis. During the six-month period, the sales agency reported to the home office sales orders. These were billed at P70,000 of which of P40,000 was collected) the sales agency paid expenses of P5,800 but was reimbursed by the home office. On August 15, 2012, the sales agency samples were valued at P2,000. It was estimated that the gross profit on goods shipped to fill sales order averaged 40% of cost. 1. The cost of sales of the sales agency for the six-month period is a. P42,000 b. P44,000 c. P48,000 d. P50,000 2. The net income of the sales agency for the six-month period is a. P16,200 b. P14,200 C. P10,200 d. P8,200 3. A branch's ending inventory of merchandise shipped by the home office and purchased from outside vendors amounts to P 50,000. The post-closing trial balance in the Unrealized Gross Profit in Branch Inventory account is P 6,000 due to the home office practice of shipping merchandise at 20% above cost. The merchandise purchased from outside vendors contained in the ending inventory of the branch amounts to: a. P 38,000 b. P 18,000 c. P 30,000 d. P 14,000