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How much is the realized gross profit on installment sales

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Reference no: EM132817816

On November 1, 2020, Cebu Express Motors which maintains a perpetual inventory records sold a new automobile to Speedex for P6,120,000. The cost of the car to the seller was P4,684,500. The buyer paid 30% down and received P576,000 allowance on an old car traded, the balance being paid in equal monthly instalment payments commencing the month of sale.

  • The monthly amortization was P216,000 inclusive of 12% interest and unpaid amount of the obligation. The car tradedin has a wholesale value of P864,000 after expending reconditioning cost of P162,000
  • After paying three installments, the buyer defaulted, and the car was subsequently repossessed. When reacquired, the car was appraised to have a fair value of P2,160.000

Problem 1: How much is the realized gross profit on installment sales during 2020?

 

Reference no: EM132817816

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