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Documente Cultură
155
CHAPTER 9
9-1:
9-2:
9-3:
__375,000
P 675,000
P4,200,000
__1,500,00
P2,700,000
___X 25%
P 675,000
a
Deferred gross profit, before adjustment
Deferred gross profit, end
2009 (6,000 X 35%)
2010 (61,500 X 33%)
2011 (195,000 X 30%)
Realized gross profit, December 31, 2011
(Total P107,235)
c
2009
P7,230
2010
P 60,750
b
Sales
Cost of installment sales
Deferred gross profit
Less: Deferred gross profit, end
Installment accounts receivables, 12/31
(1,000,000-400,000)
Gross profit rate (300,000 1,000,000)
Realized gross profit
Operating expenses
Operating income
Interest and financing charges
2011
P 120,150
2,100
20,295
P5,130
P 40,455
P1,050,000
___58,500
P 61,650
P 202,000
____ 20%
P1,010,000
___440,000
P1,450,000
P1,000,000
__700,000
P 300,000
P 600,000
___X 30%
__180,000
P 120,000
___80,000
40,000
__100,000
Net income
P 140,000
156
9-5:
9-6:
Chapter 9
a
Market value of repossessed merchandise
(before reconditioning cost)
Less: unrecovered cost
Unpaid balance (80,000-30,000)
Less: Deferred gross profit (50,000X20%)
Loss on repossession
P 30,000
P 50,000
___10,000
a
Installment sales
Less: collection on installment sales
Installment account receivables, 12/31/08
Gross profit rate (500,000 1,000,000)
Deferred gross profit, 12/31/011
__40,000
(P 10,000)
P1,000,000
__200,000
800,000
___X 50%
P 400,000
OR
Deferred gross profit (1,000,000-500,000)
Less: Realized Gross Profit (200,000 X 50%)
Deferred gross profit, 12/31/011
9-7:
9-8:
d
Fair value of repossessed merchandise
Less: unrecovered cost
Unpaid balance
Less: Deferred gross profit (200,000 X 32.5%)
Loss on repossession
P500,000
_100,000
P400,000
P120,000
P 200,000
___65,000
b
Realized gross profit:
Collections:
Downpayment
Installment received (205,000-200,000)
Total
Gross Profit Rate (150,000 240,000)
Realized gross profit
Gain (loss) on repossession:
Appraised value of repossessed merchandise
Less:unrecovered cost
unpaid balance
less: deferred gross profit (200,000 X 62.5%)
Gain on repossession
_135,000
(P 15,000)
P 35,000
___5,000
40,000
_X 62.5%
P 25,000
P165,000
P 200,000
__125,000
__75,000
P 90,000
Installment Sales
9-9:
157
b
Sch.1
Date
Apr-1
Apr-1
May-1
Jun-1
Jul-1
Aug-1
Collection
750
625
625
625
625
Applying
to
Interest
Applying
to
principal
125.00
115.00
104.80
__94.40
P439.20
750.00
500.00
510.00
520.20
___530.60
P2,810.80
Balance
of
principal
P7,000.00
6,250.00
5,750.00
5,240.00
4,719.80
4,189.00
P 1,875
P 4,189
__1,466
___2,723
(P 848)
P2,810.80
__X 35%
P 983.78
c
Year of Sales
2010
2011
9-11:
( 60,000)
( 15,000)
________
( 60,000)
P 15,000 P 60,000
a
Deferred gross profit, 2010 (P1,050,000 - 735,000)
Realized gross profit, 2010 (P150,000 X 30%)
Deferred gross profit, 12/31/010
Realized gross profit, 2011 (P390,000-90,000) X 30%
Deferred gross profit, 12/31/011
P 315,000
( 45,000)
270,000
( 90,000)
P 180,000
P 90,000
P 180,000
( 7,500)
( 30,000)
( 22,500)
158
9-12:
Chapter 9
b
Deferred gross profit (Sales - Cost of Installment Sales)
Realized gross profit, 2010 (P630,000 X 40%)
Realized gross profit, 2010 (P450,000 X 40%)
Repossession (P2,400 x .40)
Realized gross profit, 2011 (P900,000 X 30%)
Deferred gross profit, 12/31/011 (P218,400)
2010
P 480,000
( 252,000)
( 180,000)
(9,600)
_______
P 38,400
2011
P450,000
( 270,000)
P180,000
9-13: 1c
Trade-in value
Less: Actual value
Estimated selling price
Less:reconditioning cost
normal gross profit (25,000 X 15%)
Overallowance
Realized gross profit:
Collection:
Downpayment
Actual value of merchandise-Trade In
Installment collected (5,000 X 3)
P 30,000
P 25,000
P 1,250
__3,750
___5,000
P 5,000
20,000
_15,000
__20,000
P 10,000
P 40,000
P 85,000
( 10,000)
P 75,000
_60,000
P 15,000
_X 20%
P 8,000
9-14: c
Collection excluding interest (P900,000-P300,000)
Gross profit rate (P1,200,000 P3,600,000)
Realized Gross Profit, December 31, 2011
Add Interests
Total Revenue
P 600,000
X 33 1/3%
200,000
__300,000
P 500,000
9-15: a
Wholesale value of repossessed merchandise
Less: unrecovered cost
Unpaid balance:
Sales, 10/1/010
P 24,000
Collection, 2010 (6,000 2,000)
( 8,000)
Collection, 2011 (1,000 X 7)
( 7,000)
Deferred gross profit (9,000 X 25%)
Loss on repossession
P 9,000
__2,250
4,000
___6,750
(P 2,750)
Installment Sales
9-16:
9-17:
9-18:
9-19:
a
Trade-in Value (P300 X 6)
Less: Actual value
Estimated selling price (P315 X 6)
Less:Reconditioning cost (P25 X 6)
Gross Profit (P1,890 X 10%)
Over-allowance
159
P 1,800
P 1,890
P150
_189
a
Deferred gross profit, before adjustment
Deferred gross profit, end
2010: P32,500 X (30% 130%)
2011: P180,000 X (33 1/3% 133 1/3%)
___339
___1,551
P
249
P 76,000
P 7,500
_45,000
__52,500
P 23,500
d
Unpaid balance (P27,000 - P16,000)
Multiply by gross profit rate (P734,400 P2,160,000)
Deferred gross profit to be cancelled on repossession
P 11,000
___X 34%
P 3,740
b
Collection:
2010 Downpayment
2011 Installment collection
Interest
Total
P 600,000
600,000
__540,000
P1,740,000
Cost to be recovered
P4,000,000
Since cost is not yet fully recovered, then no gross profit is to be recognized in 2011.
9-20:
d
Regular Sales
Cost of regular sales
Gross profit on regular sales
Add: Realized gross profit on installment sales
2010 (25,000 X 50%)
2011 (62,500 X 55%)
Total realized gross profit
Operating expenses
Net income, 12/31/011
P 187,500
__112,500
P 75,000
P12,500
_34,375
__46,875
121,875
___31,250
P 90,625
160
9-21:
9-22:
9-23:
9-24:
Chapter 9
a
Installment sales 2010
Collections:
Down payment (20% x 785,000)
Installment (40% x 628,000)
Installment accounts receivable 2010, 12/31/010
Gross profit rate on sales
Deferred gross profit- 2010, 12/31/010
a
Regular sales
Cost of regular sales
Gross profit on regular sales
Realized gross profit on installment sales:
Installment sales (1,093,750 x 240%)
Installment accounts receivable-12/31/011
Collections
Gross profit on rate on sales
Total realized gross profit
Operating expenses (1,137,500 x 70%)
Net income, 12/31/011
P785,000
P157,000
251,200
P1,575,000
1,050,000
525,000
2,625,000
1,575,000
1,050,000
140/240
a
Regular sales
Cost of regular sales
Gross profit on regular sales
Realized gross profit on installment sales:
Collections excluding Interest (312,000 24,000)288,000
Gross profit rate (270,000/900,000)
30%
Total realized gross profit
Loss on repossession
Fair value of repossessed merchandise
54,000
Less: Unrecovered cost (100,000 x 70%)
70,000
Total realized GP after loss on repossession
Less: Operating expenses
72,000
Installment accounts written-off (44,000 x .70) 30,800
Net operating income
Interest income
Net income
1.
a
Fair value of repossessed air conditioners (5 x P4,000)
Less unrecovered cost (P25,600 x 65%)
Loss on repossession
408,200
376,800
35/135
P 97,689
612,500
1,137,500
796,250
P 341,250
P375,000
215,000
160,000
86,400
246,400
( 16,000)
230,400
102,800
127,600
24,000
P151,600
P20,000
16,640
P 3,360
Installment Sales
161
9-24, continued:
2.
9-25:
a
Sales price (P100,000 x 90%)
Add underallowance (P12,000 P10,000)
Adjusted sales value
Less cost of sales
Gross profit
P90,000
2,000
P92,000
59,800
P32,200
Sales price
Less fair value of merchandise traded in
Balance
P90,000
10,000
P80,000
P12,000
16,000
38,400
P66,400
35%
P23,240
1.
Sales price
Add underallowance on trade in (P97,500 P80,000)
Adjusted sales price
Cost of sales
Gross profit
Gross profit rate (P216,875 / P867,500)
P850,000
17,500
867,500
650,625
P216,875
25%
Sales price
Less trade in value of merchandise traded in
Balance
Cash downpayment (25% of P850,000)
Installment accounts receivable
P850,000
80,000
770,000
212,500
P557,500
Date
July
July
August
September
Total
Collection
Interest income
Principal
P30,000
30,000
30,000
P5,575
5,331
5,084
P15,990
P24,425
24,669
24,916
P74,010
Balance
P557,500
533,075
508,506
483,490
P300,000
362.617.5
P(62,617.5)
162
Chapter 9
9-24, continued:
2.
9-26:
P 97,500
212,500
74,010
384,010
25%
P 96,003
c
Fair value of repossessed merchandise
Loss on repossessions
Unrecovered cost
Divided by account defaulted
Cost ratio (P126,000 / P180,000)
P112,500
13,500
126,000
180,000
70%
P750,000
360,000
P390,000
1.
P128,000
P517,500
414,000
P103,500
20%
120,500
P 7,500
Installment Sales
163
9-26, continued:
P120,500
238,200
P358,700
20%
P 71,740
P128,750
103,000
25,750
P 97,490
P 97,490
(33,290)
P 64,200
9-27: b
9-28
1.
2.
2009
P828,000
(617,000)
(7,200)
2010
P980,000
(578,000)
2011
P1,250,000
(425,000)
P203,800
28%
P57,064
(4,200)
P397,800
30%
P119,340
P825,000
32%
P264,000
2009
P180,000
P180,000
2010
P625,000
125,000
P500,000
2011
P900,000
650,000
P250,000
a
a
Supporting computations:
Installment accounts receivable, 1/1/011
Installment accounts receivable, 12/31/011
Collections (P930,000)
Installment accounts receivable, 1/1/011:
2009 sales
(P45,000 / 25%)
2010 sales
(P150,000 / 24%)
Installment accounts receivable, 12/31/011:
2010 sales
(P30,000 / 24%)
2011 sales
(P195,000 / 30%)
Total
P180,000
P625,000
P125,000
650,000
P775,000
164
Chapter 9
SOLUTIONS TO PROBLEMS
Problem 9 1
Journal Entries:
2009
Installment A/R2009................ 104,000
Installment A/R2010................
Installment A/R2011................
Installment Sales..................
104,000
Cost of Installment Sales............
Inventory.............................
64,480
Cash...........................................
Installment A/R2009
Installment A/R2010.........
Installment A/R2011.........
Interest Revenue..................
66,980
116,000
P21,736
P11,066
29,987
P40,553
P 5,700
10,939
29,730
P46,369
73,810
125,520
21,736
121,000
68,440
57,200
9,780
Computations:
2009: P57,200 X .38 =
121,000
68,440
21,736
2011
116,000
64,480
2010
73,810
145,460
29,120
71,920
_
24,480
116,000
15,000
26,680
76,230
27,550
121,000
68,440
47,560
11,066
29,487
40,553
73,810
47,190
5,700
10,939
29,730
46,369
Installment Sales
2010:
2011:
Problem 9 2
Inventory.................................................................................................45,200
Cash.................................................................................................
Notes Receivable 2010 (P32,000 + P62,000 + 3,600)...........................97,600
Unearned Interest Revenue (P7,167 + P3,600)..............................
Installment Sales..............................................................................
Cost of Installment Sales (P45,200 P2,000 inventory increase).........43,200
Inventory..........................................................................................
Cash.......................................................................................................35,600
Notes Receivable 2010....................................................................
Unearned Interest Revenue 2010............................................................3,600
Interest Revenue..............................................................................
Installment Sales.....................................................................................86,833
Cost of Installment Sales.................................................................
Deferred Gross Profit on Installment Sales2010..........................
Deferred Gross Profit on Installment Sales2010..................................16,080*
Realized Gross Profit on Installment Sales.....................................
*Gross profit percentage: 50.25% (P43,633 P86,833)
.5025 x 32,000 = P16,080
Inventory.................................................................................................52,020
Cash.................................................................................................
Notes Receivable2008...........................................................................89,5001
Unearned Interest Revenue.............................................................
Installment Sales..............................................................................
160,000 + (P50,000 + P5,500) P26,000* = 89,500
*2010 Notes receivable collected in 2008
2Interest revenue from 2010 notes: P7,167 P5,579 = P1,588
Interest revenue from 2011 notes: P5,500 P1,588 = P3,912
Discount on notes receivable at end of 2011..........................................P 8,043
Interest revenue from 20011notes (see above)....................................... 3,912
Total discount at time of sale..................................................................P11,955
Cost of Installment Sales (P52,020 P8,000)........................................44,020
Inventory..........................................................................................
Cash.......................................................................................................55,500
Notes Receivable2010 (P62,000 P36,000).................................
Notes Receivable2011...................................................................
* P89,500 P60,000 = P29,500
Discount on Notes Receivable2010......................................................1,588
Discount on Notes Receivable2011......................................................3,912
Interest Revenue..............................................................................
Installment Sales.....................................................................................77,545
Cost of Installment Sales.................................................................
Deferred Gross Profit on Installment Sales2011..........................
Deferred Gross Profit on Installment Sales2010 (P26,000
P1,538 = P24,412; P24,412 x .5025)..................................................12,267
Deferred Gross Profit on Installment Sales2011..................................11,062*
165
45,200
10,767
86,833
43,200
35,600
3,600
43,200
43,633
16,080
52,020
11,9552
77,545
44,020
26,000
29,500*
5,500
44,020
33,525
2.
23,329
Chapter 9
P24,000
=
P60,000
40%
42%
Gross profit
=
Installment sales
P86,000
=
P200,000
Journal Entries:
Accounts Receivable......................................................................................
Sales.......................................................................................................
Installment Contracts Receivable 2011......................................................
Installment Sales.....................................................................................
Cost of Installment Sales................................................................................
Shipments on Installment Sales..............................................................
Purchases. .....................................................................................................
Cash.......................................................................................................
Selling Expenses.............................................................................................
Cash.......................................................................................................
Cash..............................................................................................................
Accounts Receivable...............................................................................
Installment Contracts Receivable 2009...............................................
Installment Contracts Receivable 2010...............................................
Installment Contracts Receivable 2011...............................................
Adjusting Entries:
Installment Sales............................................................................................
Cost of Installment Sales........................................................................
Deferred Gross Profit on Installment sales 2011................................
Deferred Gross Profit 2009 (P40,000 x 40%)............................................
Deferred Gross Profit 2010 (P80,000 x 42%)............................................
Deferred Gross Profit 2011 (P110,000 x 43%)..........................................
Realized Gross Profit..............................................................................
Doubtful Accounts Expense (1/4 x 1% x P600,000)......................................
Allowance for Doubtful Accounts...........................................................
Closing Entries:
Sales.............................................................................................................
Merchandise Inventory, December 31...........................................................
Shipments on Installment Sales......................................................................
Merchandise Inventory, January 1.........................................................
Purchases................................................................................................
Selling Expenses.....................................................................................
Doubtful Accounts Expense....................................................................
Income Summary....................................................................................
Realized Gross profit.....................................................................................
43%
600,000
600,000
200,000
200,000
114,000
114,000
476,000
476,000
210,000
210,000
790,000
560,000
40,000
80,000
110,000
200,000
114,000
86,000
16,000
33,600
47,300
96,900
1,500
1,500
600,000
260,000
114,000
240,000
476,000
210,000
1,500
46,500
96,900
Income Summary....................................................................................
Income Summary............................................................................................
Retained Earnings..................................................................................
Installment Sales
167
96,900
143,400
143,400
3.
4.
P600,000
342,000
258,000
96,900
354,900
211,500
P143,400
Total
P 96,900
P144,000
260,000
P 62,000
3,500
58,500
20,000
60,000
90,000
200,000
P832,500
P 60,000
8,000
25,200
38,700
131,900
Equity:
Capital stock...........................................................................................
Retained earnings....................................................................................
700,600
Total Liabilities and Equity....................................................................
P406,000
294,600
P832,500
Chapter 9
168
Problem 9 4
1.
2010: GP rate =
30%
=
=
P21,600 + P1,200
Gross profit
P24,000 + P52,000
=
P150,000 P97,500
Installment sales
2.
=
=
P150,000
Installment Sales............................................................................................
Cost of Installment Sales........................................................................
Deferred Gross Profit, 2011...................................................................
Deferred Gross profit, 2010...........................................................................
Deferred Gross Profit, 2011..........................................................................
Realized Gross Profit..............................................................................
P22,800
P76,000
=
P52,500
P150,000
150,000
97,500
52,500
14,400
25,900
40,300
Computation:
2010
Sales
P76,000
24,000
52,000
4,000
P48,000
30%
P14,400
Sales.............................................................................................................
Realized Gross Profit.....................................................................................
Loss on Repossession..............................................................................
Cost of Sales...........................................................................................
Selling and Administrative Expenses......................................................
Income Summary....................................................................................
Income Summary............................................................................................
Retained Earnings..................................................................................
3.
2011
Sales
P150,000
76,000
74,000
P 74,000
35%
P 25,900
Total
P 40,300
212,000
40,300
400
165,000
66,000
20,900
20,900
20,900
Apple Company
Statement of Comprehensive Income
Year Ended December 31, 2011
Sales................................................................................................................................
Cost of sales.......................................................................................................
P212,000
165,000
47,000
40,300
87,300
400
86,900
66,000
P 20,900
Schedule 1
2010
Sales
P76 000
24,000
52,000
4,000
P48,000
30%
P14,400
2011
Sales
P150,000
76,000
74,000
P 74,000
35%
P 25,900
Total
P40,300
Problem 9 5
1.
54,400
Installment Sales................................................................................
Cost of Installment Sales.............................................................
Deferred Gross Profit, 2011........................................................
80,000
54,400
54,400
25,600
14,000
8,000
22,000
Computation:
2010
Sales
P82,000
_ 36,000
46,000
__6,000
P40,000
__35%*
P14,000
2011
Sales
P 80,000
_55,000
25,000
___
P 25,000
___32%
P 8,000
Total
P 22,000
DGP, 1/1
P28,700 (26,600 + 2,100)
*2010 Gross profit rate= =
=
ICR, 1/1
P82,000 (36,000 + 40,000 + 6,000)
170
2.
35%
Chapter 9
Sales..................................................................................................
Merchandise Inventory, December 31...............................................
Shipments on Installment Sales..........................................................
Merchandise Inventory, January 1..............................................
Purchases....................................................................................
Repossessed Merchandise...........................................................
Loss on Repossession..................................................................
Operating Expenses....................................................................
Income Summary.........................................................................
200,000
52,000
54,400
22,000
Income Summary...............................................................................
Retained Earnings.......................................................................
31,500
60,000
180,000
3,000
900
53,000
9,500
22,000
31,500
Sales...........................................................
Cost of sales:
Inventory, January 1............................. P 60,000
Purchases.............................................. 180,000
Repossessed merchandise..................... __3,000
Cost of goods available for sale............ 243,000
Less Shipments on installment sales..... _54,400
Cost of goods available for regular sales
Less Inventory, December 31............... _52,000
Gross profit.................................................
Less Deferred gross profit on installment
sales, 2011............................................
Realized gross profit, 2011..........................
Add Realized gross profit on 2010
installment sales....................................
Total realized gross profit...........................
Less Loss on repossession...........................
Total realized gross profit after adjustment
Regular
P200,000
188,600
_136,600
P 63,400
Installment
Total
P80,000 P280,000
54,400
25,600
191,000
89,000
17,600
8,000
17,600
71,400
14,000
22,000
___900
14,000
85,400
__900
P21,100
84,500
_53,000
P31,500
Installment Sales
171
Problem 9 6
1.
London Products
Schedule of Cost of Goods Sold
Year Ended December 31, 2011
Merchandise inventory, January 1....................................................................................
Purchases .......................................................................................................................
Freight-in .......................................................................................................................
Repossessed merchandise..................................................................................
Cost of goods available for sale........................................................................................
Less Merchandise inventory, December 31.........................................................
Cost of goods sold.............................................................................................................
2.
London Products
Schedule of Allocation of Cost of Goods Sold
Year Ended December 31, 2011
Amount
P60,000
120,000
300,000
120%
125%
On Cash
Price Basis
P 60,000
100,000
240,000
Ratio to
Total
60/400
100/400
240/400
P 400,000
3.
P 48,000
238,000
12,000
14,000
312,000
52,000
P260,000
Allocated
Cost
P 39,000
65,000
156,000
P260,000
London Products
Statement of Comprehensive Income
Year Ended December 31, 2011
Sales.................................................
Cost of goods sold..............................
Gross profit........................................
Less Unrealized gross profit:
On installment contracts
receivable,12/31 (192,000 x 144/300)
Realized gross profit..........................
Add Realized gross profit on
prior years' sales (Schedule 1):
2009.....................................
19,200
2010.....................................
14,700
Installment
Charge
Total
Sales
Sales
P480,000 P 300,000
P120,000
260,000
156,000
65,000
P 220,000 P 144,000
P 55,000
92,160
127,840
33,900
92,160
51,840
33,900
Cash
Sales
P 60,000
39,000
P 21,000
161,740
85,740
10,200
10,200
151,540
93,000
P 58,540
P 75,540
172
Chapter 9
Problem 9-6, continued:
Schedule 1
2009
Installment contracts receivable, January 1:
2009 P32,000 40%................................................................
2010 P56,000 35%................................................................
Less Installment contracts receivable, December 31.........................
Total credits.......................................................................................
Less Credit representing repossession...............................................
Total collections................................................................................
Multiply by Gross profit rate.............................................................
Realized gross profit..........................................................................
2010
P80,000
_22,000
58,000
_10,000
P48,000
___40%
P19,200
P160,000
__90,000
70,000
28,000
P 42,000
___35%
P 14,700
2009
P 2,000
2010
P12,000
Total
P 14,000
10,000
28,000
38,000
Schedule 2
4,000
__6,000
P(4,000)
9,800
13,800
18,200
__24,200
P( 6,200) P( 10,200)
Problem 9 7
1.
2010
2010
2010 installment sales (P400,000 x 42%*)..................................P 168,000
2011:
2010 installment sales (P173,000 x 42%)....................................
2011 installment sales (P560,000 x 38.5%*)............................... ________
Deferred gross profit.......................................................................... P 168,000
2011
P 72,660
__215,600
P 288,260
_______ ____68,000
2,210,000 _3,032,000
1,701,800
1,701,800
420,000
1,767,000
_83,000*
2,270,000
Installment Sales
173
Problem 9-7, continued:
42%
38.5%
P 99,000
83,000
111,330
28,330
P 70,670
Installment
Total
Sales
Sales
P3,032,000 P3,237,000
_1,864,680 _2,022,680
1,167,320 1,214,320
__247,170 __247,170
920,150
967,150
___51,240 ___51,240
971,390 1,018,390
___28,330 ___28,330
P 943,060
990,060
__592,960
P 397,100
174
Chapter 9
Schedule 1
Installment contracts receivable 2011, December 31....................
Installment contracts receivable 2011 defaulted...........................
Total............................................................................................
Multiply by 2011 gross profit percentage.....................................
Unrealized gross profit on 2011 installment sales........................
P 560,000
___82,000
P 642,000
___38.5%
P 247,170
Schedule 2
Installment contracts receivable 2010, January 1...............................
Less Installment contracts receivable 2010, December 31.................
Total credits for the period.................................................................
Less Installment contracts receivable 2010 defaulted........................
Total collections................................................................................
Multiply by 2010 gross profit percentage..........................................
Realized gross profit on 2010 installment sales.................................
1.
P 400,000
__173,000
227,000
__105,000
P 122,000
_____42%
P 51,240
P 240,000
160,000
__200,000
P 600,000
640,000.00
16,000.00
10,920.00
5,080.00
16,000.00
10,767.60
5,232.40
Installment Sales
175
Problem 9-8, continued:
October 31
Cash............................................................................................. 72,000.00
Notes Receivable (Lot 1)............................................................... 288,000.00
Lot 1. ......................................................................................
240,000.00
Deferred Gain on Sale of Land...............................................
120,000.00
December 31
Cash.............................................................................................
Notes Receivable (Lot 1).........................................................
Notes Receivable (Lot 2).........................................................
Notes Receivable (Lot 3).........................................................
Interest Income.......................................................................
78,000.00
6,240.00
5,389.37
6,800.00
59,570.63
Computation:
Total
Collections...................................... P78,000.00
Apply to interest:
Lot 1 P288,000.00 x 12% x 2/12
Lot 2 P353,687.60 x 12% x 3/12 59,570.63
Lot 3 P720,000.00 x 12% x 6/12 _________
Apply to principal........................... P18,429.37
2.
Lot 1
P12,000.00
Lot 2
Lot 3
P16,000.00P50,000.00
5,760.00
_________
P 6,240.00
10,610.63
_________ _43,200.00
P 5,389.37 P 6,800.00
Lot 1
P78,240.00
Lot 2
P51,701.77
Lot 3
33.33%
_________
P26,080.00
60%
_________ _____76%
P31,021.06P96,368.00
3.
176
Chapter 9
Problem 9 9
=67% x P6,227,000
P 8,060,000
1,612,000
6,448,000
6,227,000
4,172,090
2,054,910
909,000
P 1,145,910
Schedule 1
A lots : 26 @ P150,000................................................
B lots : 32 @ P100,000................................................
C lots : 12 @ P80,000..................................................
.........................................................
Total
Sales Price
P3,900,000
3,200,000
960,000
P8,060,000
Cash
Received
P1,650,000
800,000
240,000
P2,690,000
Installment
Notes Balance
P 2,250,000
2,400,000
720,000
P 5,370,000
Number of
Unit
Lots
Price
80
P150,000
100
100,000
120 80,000
300
Total
Sales Value
P12,000,000
10,000,000
9,600,000
P31,600,000
Schedule 2
Class
A........................................................................
B........................................................................
C........................................................................
Total............................................................
Cost of tract:
Cost of land....................................................................................................
Legal fees, etc................................................................................................
Grading contract.............................................................................................
Water and sewerage system contract.............................................................
Paving contract...............................................................................................
General office expenses (3/4 x P236,000).....................................................
Total.............................................................................................................
P 4,800,000
600,000
225,000
184,900
266,300
177,000
P 6,253,200
P6,253,200
Cost rate : = 20% (rounded off)
P31,600,000
Cost of sales (P8,060,000 x 20%)...........................................................................
Installment Sales
177
P 1,612,000
Problem 9 10
Rizal Company
Statement of Comprehensive Income
Year Ended December 31, 2011
Installment sales [(P14,300 x 7) + (P725 x 4)]...........................................
Cost of goods sold on installment (schedule 1)..........................................
Gross profit. ...............................................................................................
Less Deferred gross profit on 2011 sales
(P103,000 P21,000 = P82,000 x 23%*).........................................
Realized gross profit on 2011 sales............................................................
Add Realized gross profit on prior years' sales
2009 : P60,000 x 33-1/3*...................................................................
2010 : P115,000 x 35%*....................................................................
Total realized gross profit...........................................................................
Less Loss on repossession (Schedule 4).....................................................
Total realized gross profit after adjustment................................................
General and administrative expenses..........................................................
Net income (loss).......................................................................................
P103,000
__79,310
23,690
__18,860
4,830
P20,000
_40,250
__60,250
65,080
__33,100
31,980
__50,000
P(18,020)
*See Schedule 3
Schedule 1
Purchases (P10,500 x 8).............................................................................
Repossessed merchandise...........................................................................
Cost of goods available for sale..................................................................
Less Inventory, December 31
Number of units on hand...................................................................
Multiply by average unit cost (Schedule 2)........................................
Cost of goods sold on installment...............................................................
P 84,000
___2,520
86,520
1
P 7,210
___7,210
P 79,310
Schedule 2
Purchases during 2008 (P10,500 x 8).........................................................
Add Repossessed merchandise...................................................................
Total..........................................................................................................
divide by Number of units (8 + 4)..............................................................
Average unit cost........................................................................................
P 84,000
___2,520
P 86,520
_____12
P 7,210
178
Chapter 9
Schedule 3
2009
Sales
2009 : P15,000 x 10.......................................
2010 : P14,000 x 20.......................................
2011 : P14,300 x 7.........................................
P725 x 4..............................................
Sales
.......................................................
Cost of goods sold:
Inventory, January 1........................................
Purchases .......................................................
Repossessed merchandise................................
Cost of goods available for sale.......................
Less Inventory, December 31..........................
Cost of goods sold...........................................
Gross profit. ............................................................
Gross profit rates......................................................
2010
2011
P150,000
P280,000
_______
150,000
_______
280,000
100,100
__2,900
103,000
120,000
_____
120,000
_20,000
100,000
P 50,000
33-1/3%
20,000
162,000
_____
182,000
_____
182,000
P 98,000
35%
84,000
_2,520
86,520
_7,210
79,310
P23,690
23%
Schedule 4
Fair market value of repossessed merchandise...........................................
Less Unrecovered cost
Unpaid balance:
Original sales amount (P14,000 x 4)........................................... P 56,000
Collections prior to repossession................................................. __1,200
Total. ...........................................................................................
54,800
Less Unrealized profit (P54,800 x 35%)............................................ _19,180
Loss on repossession..................................................................................
Problem 9-11
The key to this solution is solving the gross profit rate for 2009 (3)
1.
P39,000 (P50,000 P11,000)
2.
P11,000 (P60,000 x 0.22)
P 2,520
_35,620
P33,100
3.
4.
5.
6.
7.
8.
9.
22%:
2010 realized gross profit on 2010 cash collections, P5,000 (P20,000 x .
25)
2010 realized gross profit on 2009 cash collections, P5,500 (P10,500 P5,000)
Gross profit rate 2009, 22% (P5,500 / P25,000 cash collections)
P5,000 (P1,100 / .22)
P60,000 (P80,000 P20,000)
P20,000 (P80,000 x .25)
P120,000 (P91,000 + P28,200)
23.5% (P28,200 / P120,000)
P25,275: 2011 realized gross profit on 2009 collections, (P10,000 x .22)
2011 realized gross profit on 2010 collections, (P50,000 x .25)
2011 realized gross profit on 2011 collections, (P45,000 x .235)
Installment Sales
179
Problem 9-12
Installment sales
Cost of installment sales
Gross profit rates
Cash collections:
2009 sales
2010 sales
2011 sales
Realized gross profit
2009
P92,000
58,880 (b)
36%
27,200
0 (e)
2010
P103,000
62,830
39% (c)
48,300
36,600
16,620 (f)
2011
P115,000 (a)
74,750
35%
12,200
33,280 (d)
43,450
19,250 (g)
Computations:
(a)
(b)
(c)
(d)
P19,250
(12,200)
0
P 7,050
P62,830
36,660
26,230
P33,280
(f)
(g)
P75,500
58,880
P16,620
P12,200
P69,880
62,830
7,050
P19,250
Problem 9-13
1.
Repossessed Inventory
2010 repossessi0ns (P37,500 x 20%)
2011 repossessions (P24,000 x 50%)
Trade-In inventory:
Fair value
Sold
Total inventory
P 7,500
12,000
P40,875
27,000
180
P19,500
13,875
P33,375
Chapter 9
2.
3.
Repossessed Inventory
19,500
Loss on repossession or Allowance for bad debts
13,900
Accounts receivable
To record repossessions on defaulted contracts.
Note: No deferred gross profit is cancelled because no
Ggoss profit rate on installment sales is given.
Sales (P64,035 P40,875)
23,160
Cost of trade-Ins
sold
27,000
Trade-In inventory
Loss on trade-in inventory
Sales-trade-ins
To reduce trade-in inventory to wholesale market value
And to reflect this in lower sales and losses.
To reflect sales and cost of sales for trade-ins in separate accounts.
33,400
11,160
12,000
27,000