{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

28689042-Practical-Accounting-2-Installment-Sales

# 28689042-Practical-Accounting-2-Installment-Sales - 2nd Flr...

This preview shows pages 1–4. Sign up to view the full content.

2 nd Flr, GF Partners Bldg, 139 H.V. dela Costa, Salcedo Village, Makati City 3 rd Flr. EPCIB Bldg. 2070 Claro M. Recto, Manila Practical Accounting 2 Prof. Cecilla Mercado Installment Sales Diamante Motors sells locally manufactured jeeps on installments. Information presented below relates to Diamante’s operations for the last three calendar years. 2003 2002 2001 Cost of installment sales P8,765,625 P7,700,000 P4,950,000 Gross profit on installment sales 32% 30% 28% Outstanding installment rec’l, Dec. 31: From 2003 sales 9,728, 125 From 2002 sales 3,025, 000 8,387,500 From 2001 sales 1,512,500 4,812,500 Diamante Motors uses the installment method of accounting. 1. How much is the total realized gross profit for calendar year 2003? a. P3,753,750 c. P1,012,000 b. P6,993, 250 d. P3,044,250 The books of Super Sales , Inc. show the following balances on December 31, 2003: Accounts receivable: P313,750 Deferred gross profit (before adjustment) 38,000 Analysis of the accounts receivable reveal the following: Regular accounts P207,500 2002 installment accounts 16,250 2003 installment accounts 90,000 Sales on an installment basis in 2002 were made at 30% above cost, in 2003, at 33 1/3% above cost. Expenses paid relating to installment sales were P1,500. 2. How much is the net income on installment sales? The following information pertain to installment sales of Uniwide Variety Store: Down payment : 20% Installment sales: P545, 000 in Year 1, P785,000 in year 2, and P968,000 in Year 3 Markup on cost: 35% Collections after down payment: 40% during year of sale, 35% during the year after sale, and 25% on the third year.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
3. The realized gross profit for Year 1 is 4. The unrealized gross profit for the installment sales made during Year 2 as at the end of Year 2 is: 5. The Installment Accounts Receivable at the end Year 3 is a. P652,722 c. P602,991 b. P621,640 d. P685,358 6. The Unrealized gross profit at the end of Year 3 is Presented below are the information taken from the books of Cooler Co. 2002 2003 Sales: P125,000 P187,500 Regular 62,500 100,000 Installment Cost of good sold: Regular 75,000 112,500 Installment 31,250 45,000 Selling expenses 25,000 31,250 Collections on accounts from: Regular sales 100,000 137,500 Installment sales – 2002 37,500 25,000 Installment sales – 2003 62,500 7. Total realized gross profit in installment sales for 2003 is: 8. Net income for 2003 is: The data below are taken from the records of True Value Appliance Co. which sells appliances exclusively on installment basis: 2001 2002 2003 Installment sales P365,500 P417,800 P610,750 Gross profit rate 36% 39% 40% The balance in the Installment Accounts Receivable controlling accounts at the beginning and end of 2003 were: January 1 December 31 2001 P17,400 - 2002 205,400 P25,800 2003 - 306,250 2