Reference no: EM132756013
Questions - PLEASE PROVIDE SOLUTION AND EXPLANATION
Question 1 - Parker-Sawyer Corporation, which began business on January 1, 2020 appropriately uses installment sales method of accounting. The following information is available for 2020:
Installment Accounts Receivable, 12/31/2020 P320,000
Deferred Gross Profit, 12/31/2020 (before recognition of realized gross profit for 2020) 224,000
Gross Profit on sales 40%
Find the realized gross profit on instalment sales for the year ended December 31, 2020?
a. P96,000
c. P89,600
b. P128,000
d. P136,000
Question 2 - The books of SC Inc. show the following account balances on December 31, 2020
Accounts Receivable P313,750
Deferred Gross Profit before adjustment 38,000
Analysis of the accounts receivable reveals the following
Regular accounts P207,500
2019 installment accounts receivable 16,250
2020 Installment accounts receivable 90,000
Sales on installment basis in 2019 were made at 30% above cost and in 2020 at 33 1/3% above cost. Expenses paid relating to installment sales were P1,500.
How much is the net income on installment sales?
a. P11,500
b. P10,000
d. P11,750
c. P10,250
Question 3 - Parker-Sawyer uses the installment method of accounting and it has the following data at year-end
Gross margin on cost 66 2/3%
Unrealized Gross Profit P192,000
Cash collection includes down payment 360,000
What was the total amount of sales on instalment basis?
a. P840,000
b. P648,000
c. P480,000
d. P552,000
Question 4 - Emily Corp. Uses instalment sales method. Information regarding an instalment sales made on January 1, 2020 is shown below:
Gross profit rate 45%
Collection (principal and interest)-12/31/2020 is P20,000,000
Deferred gross profit-2020 (after year- end adjustments) is P15,210,460
Interest income- 2020 is P5,764,400
How much is the sales price exclusive of interest?
a. P12,435,600
b. P14,235,600
c. P6,406,025
d. P7,391,050
Question 5 - Emily Corp. Uses installment sales method. Information regarding an instalment sales made on January 1, 2020 is shown below:
Gross profit rate 45%
Collection (principal and interest)-12/31/2020 is P20,000,000
Deferred gross profit-2020 (after year- end adjustments) is P15,210,460
Interest income- 2020 is P5,764,400
How much is the sales price exclusive of interest?
a. P48,036,622
b. P48,036,215
c. P6,406,025
d. P7,391,050
Question 6 - The following information pertains to Parker-Sawyer Corporation customers for the year ended December 31, 2019 and 2020:
2019 2020
Sales P100,000 P120,000
Cost of sales 80,000 72,000
Cash collections
2019 sales 70,000 20,000
2020 sales 96,000
If the cost recovery method is used, what amount should Parker-Sawyer Corporation report as realized gross profit for the year ended December 31, 2020?
a. P24,000
b. P44,000
c. P20,000
d. P30,000
Question 7 - The following information pertains to Parker-Sawyer Corporation customers for the year ended December 31, 2019 and 2020:
2019 2020
Sales P100,000 P120,000
Cost of sales 80,000 72,000
Cash collections
2019 sales 70,000 20,000
2020 sales 96,000
How much is the total deferred gross profit to be reported for the year ended December 31, 2020 using cost recovery method?
a. P34,000
b. P10,600
c. P24,000
d. P48,000
Question 8 - ON January 1, 2019, Emily Corporation sold merchandise to Mr. SC for P1,000,000. Terms of the sale called for a down payment of P200,000 and the balance is payable in two annual installment payments of P400,000 beginning January 1, 2020. The cost of merchandise on the date of sale was P400,000. The company year-end reporting is December 31.
The total realized gross profit for 2019 and 2020 using the time of sale recognition of revenue is
a. P600,000 and zero
b. P120,000 and P240,000
c. Zero and zero
d. Zero and P200,000
Question 9 - ON January 1, 2019, Emily Corporation sold merchandise to Mr. SC for P1,000,000. Terms of the sale called for a down payment of P200,000 and the balance is payable in two annual installment payments of P400,000 beginning January 1, 2020. The cost of merchandise on the date of sale was P400,000. The company year-end reporting is December 31.
The total deferred gross profit for 2019 and 2020 using the time of sale recognition of revenue is
a. P600,000 and P400,000
b. P480,000 and P240,000
c. Zero and Zero
d. P400,000 and Zero
Question 10 - ON January 1, 2019, Emily Corporation sold merchandise to Mr. SC for P1,000,000. Terms of the sale called for a down payment of P200,000 and the balance is payable in two annual installment payments of P400,000 beginning January 1, 2020. The cost of merchandise on the date of sale was P400,000. The company year-end reporting is December 31.
The total unrecovered cost for 2019 and 2020 using the time of sale recognition of revenue is:
a. P200,000 and Zero
b. P480,000 and P240,000
c. Zero and Zero
d. P320,000 and P160,000
Question 11 - ON January 1, 2019, Emily Corporation sold merchandise to Mr. SC for P1,000,000. Terms of the sale called for a down payment of P200,000 and the balance is payable in two annual installment payments of P400,000 beginning January 1, 2020. The cost of merchandise on the date of sale was P400,000. The company year-end reporting is December 31.
The total realized gross profit for 2019 and 2020 using the time of collection- recognizing revenue- cost recovery method is:
a. P600,000 and Zero
b. P120,000 and P240,000
c. Zero and P200,000
d. Zero and Zero
Question 12 - ON January 1, 2019, Emily Corporation sold merchandise to Mr. SC for P1,000,000. Terms of the sale called for a down payment of P200,000 and the balance is payable in two annual instalment payments of P400,000 beginning January 1, 2020. The cost of merchandise on the date of sale was P400,000. The company year-end reporting is December 31.
The total deferred gross profit for 2019 and 2020 using the time of collection- recognizing revenue- cost recovery method is:
a. P600,000 and P400,000
b. P480,000 and P240,000
c. P400,000 and Zero
d. P200,000 and P400,000
Question 13 - ON January 1, 2019, Emily Corporation sold merchandise to Mr. SC for P1,000,000. Terms of the sale called for a down payment of P200,000 and the balance is payable in two annual instalment payments of P400,000 beginning January 1, 2020. The cost of merchandise on the date of sale was P400,000. The company year-end reporting is December 31.
The total unrecovered cost for 2019 and 2020 using the time of collection of recognizing revenue - cost recovery method is:
a. P200,000 and Zero
b. P400,000 and Zero
c. Zero and Zero
d. P400,000 and P400,000