a , Page 9 y Numbers 39 and 40 Situation 1 - An entty provided the following inventory information forthe curent year Cost Retail Beginning inventory 350,000 1,000,000 ‘Net purchases 350,000 1,100,000 Net markups 150,000 ‘Net markdowns 250,000 1,489,000 [Net sales (including sales discount of P50,000) Situation 2 - An entity purchased several machines for use in operations: «The maching was purchased on account for PS00,000. Credit terms were 2/10, 1/30. The entity paid the account within the discount period. 4 Theenty issued to the seller a noninterest bearing note to purchase a machine, The note required & payment ofP,000,000 and has a term of 2 years. The far value of the machine cannot be determined pee te effective interest rte for similar notes was 10%. The present value ofl at 10% is 83 fortwo periods. «The emity traded in an old equipment with a cos of P280,000 and accumulated depreciation of Piaig00 for a new equipment. The entity paid cash of PP440,000 and the fr value ofthe old ‘equipment was P50,000. The exchange has commercial substance, ; «The ent issued 26,000, P100 par value ordinary shares in exchange for equipment, The equipment ‘could have been purchased for P250,000 cash. 139. What isthe cost of goods sold under the conventional retail method? 700,000 b. 680,000 675,000 4d. 652,500 40, What is the total cost of the equipment? 2,070,000 . 2,060,000 2,230,000 a. 2,010,000 ‘Numbers 41 and 42 ‘On January 1, 2019, an entity purchased equipment for Pé,800,000. The equipment is expected to have fa useful life of six years with no residual value. On December 31, 2019, the entity elected to use the revaluation model, The fir value of the equipment on this date was P4, 400,000, 41. What amount of revaluation surplus should be recognized on December 31,2019? a. 400,000 '. 200,000, «600,000 ‘4. 800,000 42 What is the balance of revaluation surplus on'December 31, 20207 a. 400,000 'b. 160,000, 640,000 4. 320,000