EX-1 KCP Inc

Subject:AccountingPrice:4.86 Bought12

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EX-1 KCP Inc. sells cellphones on an installment basis. For the year ended December 31, 2016, the following were reported:

      Cost of installment sales                       P 1,050,000

      Loss on repossessions                          27,000

      Fair value of repossessed merchandise           225,000

      Account defaulted                            360,000

Deferred Gross Profit, December 31 Adjusted     216,000

What is the collections during the year?

EX-2 BULLOCK Inc. sells automatic weapons costing P 700,000 at a price of P 1,200,000. CARUSO Corp. buys a dozen of automatic weapons on installment and trade-in six of its old weapons at a trade-in value of P 300,000 each. BULLOCK spends P 25,000 to recondition the old guns and sells them for P 315,000. BULLOCK expects a 10 percent gross profit from the sale of used guns.

What is the over-allowance granted by BULLOCK on the trade-in transaction?

EX-3 On March 1, 2016, the GABRIEL Company sold machine for P 155,000. The machine costs P 100,000. The customer is allowed a trade-in allowance of P 50,000 for an old machine. A down payment of P 45,000 was made and the balance is to be paid in 12 monthly installments of P 5,000 each payable at the end of each month beginning March 31.

The old machine is estimated to have a resale value of P 70,000 after incurring a reconditioning cost of P 7,500. The seller expects a 20% profit from the sale of used machine; commission is 5%.

1.  What is the fair market value of the machine received?

2.  What is the gross profit rate?

3.  What is the correct adjusted entry to record the installment sales?