Based on physical inventory at year-end, Cherry Company determined the chocolate inventory on a FIFO basis at P2,600,000 with a replacement cost of P2,500,000. Cherry Company estimated that, after further processing costs of P1,200,000, the chocolate could be sold as finished candy bars for P4,000,000. The normal profit margin is 10% of sales. What amount should be reported as chocolate inventory at year-end? a. P2,400,000 b. P2,800,000 c. P2,600,000 d. P2,500,000
Based on physical inventory at year-end, Cherry Company determined the chocolate inventory on a FIFO basis at P2,600,000 with a replacement cost of P2,500,000. Cherry Company estimated that, after further processing costs of P1,200,000, the chocolate could be sold as finished candy bars for P4,000,000. The normal profit margin is 10% of sales. What amount should be reported as chocolate inventory at year-end? a. P2,400,000 b. P2,800,000 c. P2,600,000 d. P2,500,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Based on physical inventory at year-end, Cherry Company determined the chocolate inventory on a FIFO basis at P2,600,000 with a replacement cost of P2,500,000. Cherry Company estimated that, after further processing costs of P1,200,000, the chocolate could be sold as finished candy bars for P4,000,000. The normal profit margin is 10% of sales. What amount should be reported as chocolate inventory at year-end?
a. P2,400,000
b. P2,800,000
c. P2,600,000
d. P2,500,000
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