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How much is the realized gross profit on installment sales

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Reference no: EM132518046

Point 1: On November 1, 2020, Jirachi Motors which maintains a perpetual inventory records sold a new automobile to Deoxys for $6,120,000. The cost of the car to the seller was $4,684,500. The buyer paid 30% down and received $576,000 allowance on an old car traded, the balance being paid in equal monthly installment payments commencing the month of sale.

Point 2: The monthly amortization was $216,000 inclusive of 12% interest and unpaid amount of the obligation. The car traded-in has a wholesale value of P864,000 after expending reconditioning cost of $162,000.

Point 3: After paying three installments, the buyer defaulted, and the car was subsequently repossessed. When reacquired, the car was appraised to have a fair value of $2,160.000

Question 1: How much is the realized gross profit on installment sales during 2020?

a) 738,536.40

b) 770,036.40

c) 796,500.00

d) 724,407.30

Reference no: EM132518046

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