Reference no: EM132718073
Problem -
Q1. Nikki Inc. sold equipment costing 170,000 to Ryan Co. for 425,000 in September 17, 2015 on installment basis. Ryan Co. monthly pays 25,000 plus 2% interest at the end of each month starting 2 months from the month of sale. On, February 29, 2016, Ryan Co. defaulted on its payments due to financial difficulties. Nikki Inc. immediately repossessed the equipment and is expecting to resell it at 100,000 after incurring reconditioning costs of 15,000 and commission of 1%. The normal gross profit margin on sales of used equipment is 10%.
1. How much is the Loss on Repossession?
2. If Nikki Inc. succeeds to resell the equipment at 100,000, how much is the Net Income in 2016?
3. How much is the total RGP from the installment sale?
4. How much is the unrecovered cost?
5. How much is the DGP after repossession?
Q2. On June 7, 2017. Rom Company sells a new truck to Jose Co. for 754,000 at 25% above cost. As down payments, Rom accepted 150,000 cash and a used truck with 238,000 being allowed on the trade in. The wholesale value of the used truck is 290,000 after reconditioning cost of 46,800. During the period, 240,000 cash was collected on the contract.
1. How much is the LAR?
2. How much is the under/overallowance?
3. How much should the trade-in be recorded?
4. How much is the RGP in 2017?
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