Advanced accounting by baysa lupisan chapter 06

EXERCISES Exercise 6-1Exercise 6-2 Deferred gross profit after adj... Installment Sale 6,100,000All costs from 2006 sales arerecovered Cash receivedequals gross profit 28,000All cost fro

EXERCISES Exercise 6-1

Exercise 6-2

Deferred gross profit after adj

50,000 / 250,000 = 20%

195,000/600,000 = 32.5%

cost Grossprofit

Estimatedrealizable value

P 180,000

Adjustedselling price

P600,000

P180,000 x 16 2/3% = P30,000

Exercise 6 - 10

Correct entry

P550,000 – P6,000 = P544,000 x 1% = P5,440

1 Real Estate Sales 1,400,000

GP rate = 2,000,000/5,000,000 = 40%

(P750,000 + P1,300,000) x 40% = P820,000

Exercise 6-15

2005 Installment Accounts Receivable 4,700,000

Installment Sale 6,100,000

All costs from

2006 sales arerecovered

Cash receivedequals gross profit

28,000All cost from 2008

sales are notrecovered

to recover gross profit

Costs recovered in2005

Realized grossprofit in 2006 = P0

for 2006 sales ( P128,000 + 232,000)

GP rate = 7,800,000/15,000,000 = 52%

2008

Notes Receivable 2,197,100

c) Cost Recovery method

*P40,000 – P24,000 – P4,000 = P12,000

Deferred Gross Profit – 2008 525,000

Requirement 2 Income Statement

Reliance Sales Corp

Statement of Recognized income and ExpensesFor the Year Ended December 31, 2008

Requirement 3 -

Reliance Corp

Statement of Financial PositionDecember 31, 2008

Total Liabilities &

b Deferred Gross Profit –2006 27,200

2006 - (P110,000 – P28,000 - P9,000 - P5,000) x 40% = P27,200

2007 - (P250,000 – P92,000 - P2,800) x 38% = P58,976

2008 - (P420,000 – P238,000) x 39% = P70,980

The indicated gain of P600 is ignored and deducted from the

market value of the repossessed merchandise

Date Collection Interest

Principal Reduction

Principal Balance

48,000 + 45,840 +46,069 + 46,300 = 186,209 x 37.5% = 69,8282006

Contract Balance

Interest Revenue

Cash Collection Time of

)

Less: Installment on contract

Schedule 1 – Sales

Total Sales Price

Cash Received

Total Sales Value

Cost of Installment Sales (45,200 - 2,000) 43,200

Deferred gross profit after adjustment

6 B Downpayment (P545,000 x 2) P109,000

Less Collections in Year 2

x 35/135

18 B Market value of repossessed ref (P1,700 x 63%) P1,071

Gross profit rate on Installment sales(168,750/375,000)

38 A Sales price of Article “A” P400,000

Less Overvaluation on trade -in

Loss ondefault in

2008 on 2007sales

on hand

Expectedloss

Lot A 3/31 -Initialbalance

P1,714,280.00

9/30 P120,000-

10/31 –Initialbalance

P2,400,000.00

12/31 –P200,000–

Lot C 6/30 –Initialbalance

P4,200,000

6/30 –Downpayment

P1,800,000.00

2,400,000

P400,000–

12/31-(P2,400,0

00 x 5%)

280,000.00

2,120,000

P2,080,000.00Allocation of Cost & GP rates:

Lot A –P1,600,00

0 x 6/8

P1,200,000

P1,714,280

Lot B P2,400,00

-0 x 6/8

1,800,000

2,400,000

Lot C:

Farm A –P400,000

P600,000 House -P1,520,000

2,520,000

4,200,000

1,680,000

40%

Less:

DGP(P2,120,0

40%)

848,000

Unrecovered cost

P1,272,000Market

value[P2,520,0

P1,172,000