Reference no: EM132815749
Problem 1 - Cuppie Co. repossessed merchandise in 2017 that it sold to Katcha Co. for 1,100,000 on the installment basis in September 2016 for 30% GP margin. A down payment of 100,000 and the same amount was to be paid at the end of each succeeding month plus 10% interest. After paying a total of P1,000,000, Katcha defaulted and Cuppie immediately repossessed the remaining merchandise. It was estimated that the item's fair value is 225.000. Commission expense is estimated at 3,000.
Required -
1. How much is the turnout of the IAR upon default?
2. How much is the loss on repossession?
3. At what amount should the renowned merchandise be recorded?
Problem 2 - The following selected accounts appeared in the trial balance of the KAD Sales as of December 31, 2018 before adjustment:
|
IAR - 2017 sales
|
P6,000
|
Repossessions
|
P1,200
|
|
IAR - 2018 sales
|
80,000
|
Installment Sales
|
170,000
|
|
Inventory. Dec. 31, 2017
|
28,000
|
Regular Sales
|
154,000
|
|
Purchases
|
222,000
|
DGP - 2017
|
21,600
|
|
|
|
Operating Expenses
|
46,000
|
Additional Information:
a) IAR - 2017 sales balance as of December 2017 amount to 60,000.
b) Inventory of new and repossessed merchandise as of December 2018 amount to 38,000.
c) GP rate on regular sales during the year is 30% based on sales.
d) Repossession was made during the year and was recorded correctly. It was a 2018 sale and the corresponding uncollected account at the time of the repossession was 3,100.
Required -
1. How much is the loss on repossession?
2. What are the GP rates for 2017 and 2018?
3. How much is the Net income for the year 2018?