The following information pertains to questions 16 through 20: The Dilly Company marks up all merchandise at 25% of gross purchase. All purchases are made on account with terms of 1/10, net/60. Purchase discounts which are recorded as miscellaneous income, are always taken. Normally, 60% of each month's purchases are paid for in the month of purchase while the other 40% are paid during the first 10 days of the first month after purchase. Inventories of merchandise at the end of each month are kept at 30% of the next month's projected cost of goods sold. Terms for sales on account are 2/10, net/30. Cash sales are not subject to discount. Fifty percent of each month's sales on account are collected during the month of sale, 45% are collected in the succeeding month and the remainder are usually uncollectible. Seventy percent of the collections in the month of sale are subject to discount while 10% of the collections in the succeeding month are subject to discount. Projected sales data for selected months follow: Sales on Account Gross Cash Sales December P1,900,000 P400,000 January 1,500,000 250,000 February 1,700,000 350,000 March 1,600,000 300,000