MEYCAUAYAN COLLEGE

ADVANCE ACCOUNTING AND REPORTING PART 1

Installment Sales

Name: Date:

I. PROBLEM SOLVING

The following selected accounts were taken from the trial balance of TNC Company as of December 31,
2019:
Accounts Receivable P 750,000
Installment Receivable - 2017 150,000
Installment Receivable - 2018 450,000
Installment Receivable - 2019 2,700,000
Beginning Inventory 525,000
Purchases 3,900,000
Freight-in 30,000
Repossessed Merchandise @NRV 150,000
Repossession Loss 240,000
Cash Sales 900,000
Credit Sales 1,800,000
Installment Sales 4,460,000
Deferred Gross Profit - 2017 222,000
Deferred Gross Profit - 2018 393,600
Operating Expenses 150,000
Cost of Installment Sales 2,787,500

Additional information:

 Gross profit rates for 2017 and 2018 installment sales were 30% and 32% respectively
 The entry for repossessed goods was:
Repossessed Merchandise 150,000
Repossession loss 240,000
Installment Receivable - 2017 180,000
Installment Receivable - 2018 210,000
 Merchandise on hand at the end of 2019 (new and repossessed) was P282,000

Compute the following:

1. Total Realized Gross Profit in 2019

2. Net Income in 2019