Reference no: EM132577861

Richard Trading Corp. Sells household furniture both on cash and on installment basis. For each installment sales, a contract is entered into whereby the following terms are stated:

1. A down payment of 25% of the installment selling price is required and the balance is payable in equal 15 equal monthly installments.
2. Interest of 1% per month is charged on the unpaid cash sales price equivalent at each installment.
3. The price on installment sales is equal to 110% of the cash sales price.
4. For accounting purposes, installment sales are recorded at contract price. Any unpaid balances on defaulted contracts are charged to uncollectible expense. Sales of defaulted merchandise are credited to uncollectible account expense. Interest are recorded in the period earned. For its first year of operation ending December 31,2019, the books of the company showed the following:

Cash sales 378,000

Installment Sales 794,970

Merchandise Inventory, Beg 174,180

Purchases 627,891

Merchandise Inventory,End 108,630

Cash collections on installment contracts

Down Payment 198,750

Installment payments,including interest of 27,758.52(average of six monthly installments on all contracts,except on defaulted contracts) 238,023

A contract amounting to 3,300 was defaulted after the payment of 3 installments

Question 1: The gross profit rate based on total sales at cash sales price equivalent is

Question 2: The total interest earned for the first four months on the defaulted contract is

Question 3: The realized gross profit for the year 2019 is