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Compute the adjusted deferred gross profit balance

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Reference no: EM132941385

Question - TJ Company recognizes profit on credit sales on an installment basis. At the end of 20x2, before the accounts are adjusted, the ledger shows the following:

Installment receivable, 20x1 P675,000

Installment receivable, 20x2 1,050,000

Deferred gross profit, 20x1 P370,000

Deferred gross profit, 20x2 545,000

Regular sales 3,000,000

Cost of regular sales 1,920,000

Each year the gross profit on installment sales was 8% lower than the regular sales. In 20x2, the gross profit on installment sales was 4% higher than 20x1.

REQUIRED -

1. Compute the adjusted deferred gross profit balance (DGP) in 20x2?

2. Compute the total realized gross profit (RGP) in 20x2?

Reference no: EM132941385

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