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What is the deferred gross profit

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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

Reference no: EM132969452

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