Find the realized gross profit on instalment sales

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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

Reference no: EM132756013

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