The inventory control account balance of NEVERGIVEUP CORP. at June 30, 2020 was P221,020 using the perpetual inventory system. A physical count conducted on that day found inventory on hand worth P220,200. Net realizable value for each inventory item held for sale exceeded cost. An investigation of the discrepancy revealed the following:

1. Goods worth P6,600 held on consignment for Port Company had been included in the physical count.
2. Goods costing P1,200 was purchased on credit from Rome, Inc. on June 27, on FOB shipping point terms. The goods were shipped on June 28, 2020 but, as they had not arrived by June 30, 2020, were not included in the physical count. The purchase invoice was received and processed on June 30, 2020.
3. Goods costing P2,400 sold on credit to ALTHEA Co. for P3,900 on June 28, 2020 on FOB destination terms. The goods were still in transit on June 2016. The sales invoice was processed on June 29, 2020.
4. Goods costing P2,730 were purchased on credit (FOB destination) from Sanmig Co. on June 28, 2020. The goods were received on June 29, 2020 and included in the physical count. The purchase invoice was received on July 2, 2020.
5. On June 30, 2020, NEVERGIVEUP sold goods costing P6,300 on credit (FOB shipping point) to Pizza Co. for P9,600. The goods were dispatched from the warehouse on June 30, 2020 but the sales invoice had not been processed at that date.
6. Damaged inventory items valued at P2,650 were discovered during the physical count. These items were still recorded on June 30, 2020 but were omitted from the physical count records pending their write-off.

Based on the preceding information, show the solution on the following:

2. The error described in (item e) will

1. Overstate gross profit by P3,300. c) Overstate sales revenue by P9,600.
2. Understate gross profit by P3,300. d) Understate inventory by P6,300

3. The Inventory control account balance should be increased (decreased) by

1. (P3,820) c) (P3,000)
2. P3,820 d) P3,000

4. If the perpetual inventory records show lower of inventory than the physical count, an explanation of the difference might be unrecorded

1. Purchases c) Sales discounts

2. Sales. d) Purchase discounts