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Question - Assume that on April 1, 2011, the Motor Sales Company sells a car for an installment price of P145, 000. The car costs P100, 000. The customer is allowed a trade-in value of P45, 000 for this old car. He makes a down payment of P40, 000 and the balance to be paid in twelve equal installments in P5, 000 each. It is estimated that the old car can be sold for P70, 000 after incurring reconditioning expenses estimated at P11, 000. The company usually makes a gross profit of 20% on resale. Make the necessary journal entries.
Financial Statement Analysis and Preparation
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