INSTALLMENT SALES

PROBLEM 1.
The following selected accounts were taken from the trial balance of MM Co. as of Dec. 31, 2022:
Accounts receivable 750,000
Installment receivable – 2020 150,000
Installment receivable – 2021 450,000
Installment receivable – 2022 2,700,000
Beginning inventory 525,000
Purchases 3,900,000
Freight – in 30,000
Repossessed merchandise @ NRV 150,000
Loss on repossession 240,000
Cash sales 900,000
Credit sales 1,800,000
Installment sales 4,460,000
DGP – 2020 222,000
DGP – 2021 393,600
Opex 150,000
Cost of Installment Sales 2,787,500
Additional information:
1. GPR for 2020 and 2021 installment sales were 30% and 32% respectively
2. The entry for repossessed goods were:
Repossessed merchandise 150,000
Loss on repossession 240,000
Installment receivable – 2020 180,000
Installment receivable – 2021 210,000
3. Merchandise on hand at the end of 2022 (new and repossessed) was 282,000
Requirement:
Total RGP in 2022 ______________________ Net Income 2022 __________________________

PROBLEM 2.
MM which begun operation on Jan. 1, 2023 uses installment method of accounting. The ff. information pertains to MM’s
operation for 2023.
Installment sales 5,000,000
Regular sales 3,000,000
Cost of installment sales 2,500,000
Cost of regular sales 1,500,000
General and administrative expenses 500,000
Collections on installment sales 1,000,000
2023 RGP _________________ 12/31/2023 DGP ____________ 12/31/2023 Comprehensive income __________

PROBLEM 3.
MM is a real estate developer that begun operation on Jan. 2, 2023. MM uses the installment method of revenue
recognition. Its sales are based on the basis of 10% downpayment, with the balance payable over 30 years. MM GPR is
40%. Relevant information or the 1st year is as follows:
Sales 32,000,000
Cash collections 4,040,000
RGP _________________ and DGP __________________ at Dec. 31, 2023.