Reference no: EM132826164

On July 1, 2019, the Hapdi Company of DJ Builders Company of Cagayan Valley establishes an organization in Sta. Mesa, Manila to act as sales agency. The following assets are sent to the agency on July 1:

1. A working fund to be operated under the imprest fund 1,000
2. Samples from the merchandise stock 5,000
3. Advertising materials and literature 1,250

During July the agency submits sales on account of P17,600 that are approved by the home office; cost of merchandise shipped in filling orders is P10,500. Home office disbursements chargeable to the agency are as follows:

Furniture and fixtures for agency 2,400
Salaries and commissions 1,750
Rent 800
Total 4,950

On July 31 the agency working fund is replenished. Paid expense vouchers submitted by the agency are as follows:

Advertising expense 325
Miscellaneous expense 600

The following information is used in adjusting the agency accounts on July 31:

1. Agency samples will be useful until December 31; at that time it is believed they will have a salvage value of 40% of cost.
2. Approximately 2/5 of the advertising materials and literature remain on hand. Furniture and fixtures are to be depreciated on a 5-year basis.
3. The agency manager is to receive a bonus of 5% of all sales above P10,000 a month, the bonus to be paid by the home office at quarterly intervals.

Problem 1. Determine the gross profit for the month ended July 31, 2019. __________.

Problem 2. Determine the amount of expenses for the month ended July 31, 2019.________.

Problem 3. Determine the net income for the month ended July 31, 2019.