Reference no: EM133005179
Questions -
Q1. Axie Company sold vehicles on installment basis. On October 1, 2020, Toyota Model costing P747,600 was sold for P1,236,000 on installment basis. A cash down payment of P216,000 was made. In addition to the cash down payment, a Honda Model was accepted with trade in value of P300,000 and balance is payable in 12 monthly installments amounting to P78,000 due starting at the end of October. The Honda Model has an estimated selling price of P 400,000 after reconditioning the same for P50,000. The normal gross profit, to be considered in the fair value computation, is 10%. DDD already adapted PFRS 15 in recognizing revenue. The market rate of interest is 12%.
Determine the following:
a. Trade In to be reported on December 31, 2020
b. Installment Sales
c. Net Income in 2020
d. Entries to record the transactions in 2020
Q2. Axie Company sells new automobiles. A new Escapade costing P700,000 was sold on October 1, 2020 for P1,060,000. A used Toyota Revo was accepted as down payment and an allowance of P300,000 was accepted on the trade in. The balance is payable in 36 equal monthly installments of P25,500 starting November 1, 2020. The interest rate is 10%. EEE anticipates selling price on reconditioned automobile of P350,000 after reconditioning it for P50,000. Selling costs equal to 5% of selling price is also anticipated. The gross profit for reconditioned automobile is expected to be 20%.
Determine the following:
a. Revenue to be recognized in 2020
b. Balance of Trade in Item Account
c. Net income to be recognized in 2020
d. Entries to record the transactions in 2020
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