Compute the payment per year for the installment sales

Reference no: EM131812715

On 1/1/2015, PHIL Company sold merchandise with a cost of $60,000 for $100,000 with 10% down payment and the remaining 90% on the installment basis over 3 years. The annual payment will be made at the end of each year starting from 12/31/2015. PHIL repossessed the merchandise from the customer due to default payments on 1/1/2017 when the fair value of the repossessed merchandise was $25,000. PHIL used the effective interest method and 8% interest rate for the installment sales.

Insructions:

1) Compute the payment per year for the installment sales,

2) Prepare any necessary journal entries for the following transactions using the installment sales method.

a. For the sale and the adjustment to defer the gross profit in 2015.

b. For the payments received in 2015 (record the annual total).

c. For the recognition of the gross profit realized in 2015.

d. For the payments received in 2016 (record the annual total).

e. For the recognition of the gross profit realized 2016.

f. For the repossessed merchandise on 1/1/2017.

Reference no: EM131812715

Questions Cloud

Prepare any necessary journal entries : Instructions: Using the equity method, prepare any necessary journal entries of BROWN for

Construction activities are summarized : PHIL Construction, Inc. had a 3-year project whose contract price was $8,000,000. Construction activities are summarized in the table below.

Classify random variable as either discrete or continuous : Classify each random variable as either discrete or continuous. The number of patrons arriving at a restaurant between 5:00 p.m. and 6:00 p.m.

What is effect on net cash provided by operating activities : The statement of cash flows has been prepared using the indirect method. What is the effect on net cash provided by operating activities for the year

Compute the payment per year for the installment sales : 1) Compute the payment per year for the installment sales, 2) Prepare any necessary journal entries for the following transactions using the installment sales

Discuss why you chose the article and what can be learned : Discuss why you chose the article and what can be learned from this trend - how would you use it to improve the quality of nursing/patient education?

How human elements affect productivity in an organization : How human elements affect productivity in an organization. What are 2 good examples of how this human element affects productivity?

Find the number of heads in two tosses of a coin : Identify the set of possible values for each random variable. (Make a reasonable estimate based on experience, where necessary.)

Reflect on your learning experiences as a consumer : Evaluate how the information provided is (or is not) beneficial to you as a healthcare consumer.

User Account

All Pages