Reference no: EM132969452
Problem 1 - The Japan Homes Corporation started operations on January 1, 2017 selling home appliance and furniture sets both for cash and on instalment basis. Data on the instalment sales operations of the company gathered for the years ending December 31, 2017 and 2018 were as follows:
2017 2018
Installment Sales 1,200,000 720,000
Cost of Installment Sales 720,000 1,050,000
Cash collected on instalment sales 2017 installment sales 630,000 450,000
2018 installment sales 900,000
On January 6, 2018 an instalment sale in 2017 was defaulted and the merchandise was repossessed. The fair market value of the merchandise after reconditioning costs amounted to P15,000. There is a 10% normal profit based on estimated resale value, the corporation incurred P3,000 disposal costs and P5,000 reconditioning cost. Related instalment receivable balance on January 6, 2018 was P17,000. The operating expenses incurred in 2017 and 2018 amounted to P50,000 and P100,000, respectively.
Q1 - What is the gross profit rate 2017 and 2018, respectively?
30% and 30%
30% and 40%
40% and 30%
40% and 40%
Q2 - What is the Deferred Gross Profit as of 2018 form 2017 sales?
P30,900
P41,200
P72,100
P75,000
Q3 - How much is the amount of estimated resale value?
P18,000
P19,000
P20,000
P21,000
Q4 - What is the amount to be debited as the value of Repossessed Merchandise at a time of repossession?
P10,000
P10,2000
P11,900
P15,000
Q5 - How much is the gain/(loss) on repossession?
P200 gain
P1,900 gain
P200 loss
P1,900 loss
Q6 - How much is the RGP after gain or (loss) on repossession in December 31, 2017?
P252,000
P221,200
P228,000
P432,200
Q7 - How much is the RGP after gain or (loss) on repossession in December 31, 2018?
P449,800
P243,300
P443,200
P245,000
Problem 2 - AAA Insurance Company issues one year, motor/vehicle insurance for a total premium of P15,000. If it was issued on January 1, 2019,
Q1- How much is the earned portion for the month ended January 31, 2019?
10,375
625
4,175
14,375
Q2 - How much is the earned portion for the month ended December 31, 2019?
10,375
625
4,175
14,375
Q3 - How much is the unearned portion for the month ended January 31, 2019?
14,375
10,625
4,175
625
Q4-How much is the unearned portion for the month ended December 31, 2019?
625
4,175
10,625
14,375
Q5- How much is the provision for unearned premium on December 31, 2019?
4,175
10,625
625
14,375
Problem 3 - Identify true or false
1. Pinewood Co. agrees to have an artifcat for Saga Co. Pinewood is primarily liable for the artifact's conformance with the customer's specifications. Pinewood does not have the required expertise so its subcontracts Saleng Co. to do the manufacturing. If the entire manufacturing process is outsourced from Saleng Co., Pinewood would be acting as an agent of Saleng. *
True
False
2. Fight Club Co. enters into a contract with Tough Co., a promoter of mixed martial arts (MMA) fights. Under the contract, Fight Club Co. purchases MMA event tickets from Tough at a negotiated price and resells them to end customers at a marked-up price. Fight Club bears the loss for unsold tickets. The arrangement between Fight and Tough implies a principal-agent relationship whereby Fight is an agent of Tough.
True
False
3. If another party is primarily responsible for fulfilling a contract with a customer, this may indicate that the entity is an agent.
False
True