What amount should arrow company report as deferred

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Question 1: On January 2, 2010, Arrow Company sold a car to Mr. Reginales for P1,575,000. On this date, the car cost P1,102,500. Mr. Reginales paid P225,000 as down payment and signed a P1,350,000 interest bearing note at 10 percent. The note was payable in three annual installments of P450,000 beginning January 1, 2011. Mr. Reginales made a timely payment for the first installment on January 1, 2011 of P585,000 which included interest of P135,000 to date of payment. Arrow Company uses the installment method of accounting. In its December 31, 2011 Statement of Financial Position, what amount should Arrow Company report as deferred gross profit?

Reference no: EM132785783

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