EX-1 KCP Inc
Subject:AccountingPrice:4.86 Bought12
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?
