FOR SELF ASSESSMENT ONLY

SIMULATION MCQ’S BEFORE CPALE

AFAR
COMPILED BY: PATRICK ALLAISTER UY YOUNG,MBA

The records of Rastaman Company on December 31, 2022 are the

following:
SOLUTION REQUIREMENT A:

SOLUTION REQUIREMENT B:
On January 1, 2021, Dobedibidapdap sold a car to Wayoganado at a
price of P400,000 with a production cost of P300,000. It is the
Dobedibidapdap's policy to employ installment method to recognize
gross profit from installment sales.

At the time of sale, the Dobedibidapdap received cash amounting to

25% of the selling price and old car with trade-in allowance of
P50,000. The said old car has fair value of P150,000. Wayoganado
issued a 5-year note for the balance to be payable in equal annual
installments every December 31 starting 2021. The note payable is
interest bearing with 10% rate due on the remaining balance of the
note.

Wayoganado the customer was able to pay the first annual

instillment and corresponding interest due. However, after the
payment of the second interest due, Wayoganado defaulted on the
second annual installment which resulted to the repossession of
the car sold with appraised value of P110,000. On December 31,
2022, the repossessed car was resold for P140,000 after
reconditioning cost of P10,000.

1. What is the Dobedibidapdap 's realized gross profit for the

year ended December 31, 2021?
A. 50,000
B. 120,000
C. 108,000
D. 128,000

2. What is the loss on repossession for the year ended December

31, 2022?
A. 30,000
B. 20,000
C. 10,000
D. 40,000