3.1.2.

a Assignment - Installment Sales

1. White Plains, Inc. sales residential lots on installment basis. The following data was taken from the accounting rec

Installment accounts receivable, January 1 755,000.00

Installment accounts receivable, December 31 840,000.00
Deferred gross profit, January 1 339,750.00
Installment sales 950,000.00

Complete (1) the realized gross profit on December 31, 2019 and (2) the balance of the Deferred Gross Profit accou

ANSWER:
Deferred gross profit, January 1 339,750.00 https://www.studocu.com/ph/do
Divide by: Installment Accounts Receivable, January 1 755,000.00
Gross profit rate based on sales 45%

Installment accounts receivable, January 1 755,000.00

Installment sales 950,000.00
Total 1,705,000.00
Less: Installment accounts receivable, December 31 (840,000.00)
Collections in 2019 865,000.00
Gross profit rate based on sales 45%
Realized gross profit, 12/31/2019 389,250.00

Installment accounts receivable, December 31 840,000.00

Gross profit rate based on sales 45%
Deferred gross profit, 12/31/2019 378,000.00
rom the accounting records of the company as at December 31, 2019:

red Gross Profit account on December 31, 2019. 10pts

ww.studocu.com/ph/document/pamantasan-ng-lungsod-ng-maynila/accountancy/425662626-installment-sales-punzalan/10524
ment-sales-punzalan/10524708
2. Sarao Motors sells locally manufactured jeeps on installment basis. Data presented below relates to the company

2021 2020 2019

Cost of installment sales 8,765,625.00 7,700,000.00 4,950,000.00
Gross profit rates on sales 32% 30% 28%

Installment accounts receivable, 12/31

From 2021 sales 9,728,125.00
From 2020 sales 3,025,000.00 8,387,500.00
From 2019 sales 1,512,500.00 4,812,500.00

On December 31, 2021 how much is the (1) total realized gross profit and (2) deferred gross profit? 10pts

ANSWER:
2021 2020 2019
Installment accounts receivable, 1/1/2021 12,890,625.00 8,387,500.00 1,512,500.00
Installment accounts receivable, 12/31/2021 9,728,125.00 3,025,000.00 0
Collections during 2021 3,162,500.00 5,362,500.00 1,512,500.00
Gross profit rates on sales 32% 30% 28%
Realized gross profit, 12/31/2021 1,012,000.00 1,608,750.00 423,500.00

Installment accounts receivable, 12/31/2021 9,728,125.00 3,025,000.00 0

Gross profit rates on sales 32% 30% 28%
Deferred gross profit, 12/31/2021 3,113,000.00 907,500.00 -
nted below relates to the company's operations for the last three calendar years:

rred gross profit? 10pts

Total

3,044,250.00
3. Standard Sales Corporation accounts for sales on the installment basis. The balances of the control accounts for

Jan. 1, 2021 Dec. 31, 2021

Installment contract receivable - 2019 24,020.00
Installment contract receivable - 2020 344,460.00 67,440.00
Installment contract receivable - 2021 410,090.00

During 2020, the company repossessed a refrigerator which had been sold in 2017 for P5,400 and P3,200 had been
are summarized below:

2019 2020 2021

Net Sales 380,000.00 432,000.00 602,000.00
Cost of Sales 247,000.00 285,120.00 379,260.00

The resale price of the repossessed merchandise is P2,000 after reconditioning cost of P300 and a normal gross pr

The total realized gross profit on December 31, 2021 and the gain (loss) on repossession are: 10pts

ANSWER:
2019 2020 2021
Installment contract receivable, 1/1/2021 24,020.00 344,460.00 602,000.00
Installment contract receivable, 12/31/2021 0 67,440.00 410,090.00
Total 24,020.00 277,020.00 191,910.00
Credit for repossession 0 2,200.00 0
Collections 24,020.00 274,820.00 191,910.00
Gross profit rate 35% 34% 38%
Realized gross profit 8,407.00 93,438.80 72,492.25

Actual value of repossession merchandise:

Resale price: 2,000.00
Less: Reconditioning cost 300.00
Gross profit (2,000 x 35%) 700.00 1,000.00 1,000.00
Unrecovered cost:
Unpaid balance 2,200.00
Less: Deferred gross profit 748.00 1,452.00
Loss on repossession (452.00)
nces of the control accounts for Installment Contracts Receivable at the beginning and end of 2021 were:

for P5,400 and P3,200 had been collected prior to default. The company sales and cost of sales figures

t of P300 and a normal gross profit of 35%.

ssion are: 10pts

Total

174,338.05
4. Kanlaon Corporation started operations on January 1, 2020, selling home appliances and furniture sets both unde
operations for the two years ended December 31, 2020 and 2021 are as follows:

2020 2021
Installment sales 400,000.00 500,000.00
Cost of installment sales (240,000.00) (350,000.00)
Cash collections on:
2020 installment contracts 210,000.00 150,000.00
2021 installment contracts - 300,000.00

The balance of the Deferred Gross Profit account on December 31, 2021 is: 5pts

ANSWER:
2020 2021 Total
Installment sales 400,000.00 500,000.00
Collections on 2020 210,000.00 -
Collections on 2021 150,000.00 300,000.00
Installment contact receivable, 12/31/2021 40,000.00 200,000.00
Gross profit rate 40% 30%
Deferred gross profit, 12/31/2021 16,000.00 60,000.00 76,000.00
nd furniture sets both under cash and under installment bases. Data on the installment sales
5. The following data were taken from the records of Camille Appliance Company before its accounts were closed fo
uses the installment method of recognizing profit:

2019 2020 2021

Installment sales 400,000.00 440,000.00 420,000.00
Cost of installment sales 240,000.00 272,800.00 256,200.00
Operating expenses 100,000.00 94,000.00 96,000.00
Balances as of December 31:
Installment contract receivable - 2019 220,000.00 110,000.00 28,000.00
Installment contract receivable - 2020 250,000.00 92,000.00
Installment contract receivable - 2021 238,000.00

During 2021, because some customers can no longer be located, the company wrote off P9,000 of the 2019 installm

Also during 2021, a customer defaulted and the company repossessed merchandise appraised at P2,400 after costs
in 2019 by a customer who still owed P5,000 at the date of the repossession.

The total comprehensive income on December 31, 2021 is: 5pts

ANSWER:
2019 2020 2021 Total
Installment contract receivable, 1/1/2021 110,000.00 250,000.00 420,000.00
Installment contract receivable, 12/31/2021 28,000.00 92,000.00 238,000.00
Accounts written off 9,000.00 2,800.00 -
Defaulted accounts 5,000.00 - -
Collections 68,000.00 155,200.00 182,000.00
Gross profit rate 40% 38% 39%
Realized gross profit 27,200.00 58,976.00 70,980.00 157,156.00

Appraised value of repossessed merchandise 2,400.00

Less: Reconditioning costs 400.00
Actual value at time of repossession 2,000.00
Less: Unrecovered cost
Unpaid balance 5,000.00
Deferred gross profit (5,000 x 40%) 2,000.00 3,000.00
Loss on repossession (1,000.00)

Total realized gross profit 157,156.00

Loss on repossession (1,000.00)
Total 156,156.00
Operating expenses 96,000.00
Total comprehensive income, 12/31/2021 60,156.00
ccounts were closed for the year 2021. The company sells exclusively on the installment basis and it

00 of the 2019 installment accounts and P2,800 of the 2020 installment accounts as uncollectible.

d at P2,400 after costs of reconditioning estimated at P400. The merchandise had been purchased