Compute the Gross Profit Rate of the original sale

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Problem - On July 15, 2009, Lagunven Trading Corporation sold Yamaha organ costing P60,000 to Danny Seigle for P100,000. It is agreed that the buyer will make 25% down payment and the balance will be paid in ten (10) equal monthly installments.

After making the second installments on September 15, the buyer defaulted and that on December 5, 2009, the company repossessed the Yamaha organ. It is estimated that the repossessed item can be resold for P53,000 after incurring a reconditioning cost of P30,700. A commission of 20% is paid to salesmen for sales of second hand items.

Required -

A. Compute the following: 1. Gross Profit Rate of the original sale. 2. Estimated market value of the repossessed article. 3. Gain or loss on repossession 4. Realized gross profit on the contract.

B. Journal, adjusting and closing entries.

Reference no: EM133039081

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