TADENA, MELEEN QUEEN B.

Problem 1
 
On June 1, 2013, Ellaine Co. established an agency in Davao, sending
samples costing P4,200,000 which are useful until May 31,2014 and have a
salvage value of 20% of cost. A working fund of P3,412,500 is to be
maintained using the imprest basis. During 2013, the agency submitted to the
home office sales order amounting to P35,437,500. Sales per invoice were
P27,562,500 which were duly approved by the home office. Collections during
the year amounted to P14,784,000 net of 4% sales discount. The cost of
merchandise sold during the year is equal to 70% of the gross selling price.
Vouchers for expenses amounted to P1,837,500. How much net income
would be reported by the agency on December 31,2013?

Problem 2
During May 1, 2016, the home office in Manila establishes a branch in Cebu
to act as a sales agency. The following assets are sent to the sales agency on
that date.

Cash (for the working fund to be operated under the imprest

system                        P 100,000

Samples from the merchandise

stock                                                                  240,000

During May, the sales agency submits sales on account of P1,500,000 duly
approved by the home office. Cost of merchandise shipped to fill the orders
from customers obtained by the sales agency is P800,000. Home Office
disbursements chargeable to the sales agency are as follows: Furniture and
fixtures, P150,000: manager’s and salesmen’s salaries, P 88,000: and rent for
two months, P 70,000. On May 1, the sales agency working fund is
replenished; paid vouchers submitted by the sales agency amounted to P
42,000. Sales agency samples are useful until December 31, 2016, which at
this time, are believed to have a salvage value of 15% of cost. Furniture and
fixtures are depreciated at 30% per annum.

What is the net profit of the sales agency for the month of May?