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How much is the realized gross profit on the sale

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Question - Pacific Inc., a dealer of Harley motorcycles, sells on installment basis. One of its customers,Mr. Cruz, bought a motorcycle for P45,375. the cost to Pacific Inc. is P25,410. After making an initial payment of P6,050, Mr. Cruz stopped paying and defaulted on all subsequent payments. Pacific Inc. lost no time in repossessing the motorcycle. By then it had an appraised value of P12,650 and Pacific had to incur additional expenses of P1,650 on repairs and remodeling. Pacific was able to sell the motorcycle to Mr. Padilla on installment for P27,500 and initial down payment of P6,875. Using the installment method, how much is the realized gross profit on the sale to Mr. Padilla?

a. 3,300

b. 4,125

c. 3,712.5

d. 3,162.5

Reference no: EM133189993

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