Reference no: EM132784927

TT Company, which began business on January 1, 2008, appropriately uses the installment sales method of accounting. The following data are available for 2008:

Installment accounts receivable, 12/31/08 --------------------- P200,000

Deferred gross profit, 12/31/08 (before recognition

of realized gross profit) ---------------------------------- 140,000

Gross Profit on sales ---------------------------------------------- 40%

Problem 1: The cash collections and the realized gross profit on installment sales for the year ended December 31, 2008 should be

Cash collections            Realized gross profit

a. P100,000                       P80,000

b. 100,000                         60,000

c. 150,000                      80,000

d. 150,000                       60,000