How much is the amount of the loss on repossession

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Reference no: EM132802668

A Company on October 1, 2019, sold article for P10,000 costing P7,000. An used article was accepted as downpayment and the balance on a monthly installment payment starting November 1, 2019 for 12 months. P2,200 was allowed for the article traded-in. The company estimates reconditioning costs of P100 and a sales price of P1,000 after such reconditioning. The company normally expects a 20% gross profit on the sale of used articles. The Company employs the perpetual inventory method of inventory.

On April 1, 2020, the customer defaulted in the payment of installment. The article, which was sold was repossessed, estimated fair market value amounted to P3,000.

Problem 1: The amount of realized gross profit in 2019 is?

Problem 2: Using the information in the previous question, how much is the amount of the loss on repossession?

Reference no: EM132802668

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