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The Trisha Co. uses the instalment method.

The following information

was taken from the incomplete records of the company:
2015 2016 2017
Installment Sales 16,000,000 19,200,000 28,000,000
Cost of sales ? ? ?
Gross Profit ? ? ?
GP Rates ? ? 25%
2015 8,000,000 4,800,000 3,200,000
2016 9,600,000 5,760,000
2017 14,400,000
Realized Gross 1,760,000 ? 5,686,400
1. What is the realized gross profit in 2016?
2. What is the gross profit rate in 2016?

On July 1, 2016, GLENDA Motors, which maintains a perpetual

inventory records sold a new automobile to JO for P 1,700,000.
The car cost the seller P 1,301,250 the buyer paid 30% down
before deducting the allowance and received P 160,000 allowance
on an old car traded, the balance being payable in equal monthly
instalment payments. The monthly amortization amounts to P 60,000
inclusive of 12% interest on the unpaid amount of the obligation.
The car traded in has a wholesale value of P 240,000 after
expending reconditioning cost of P 45,000. After paying three
instalments, the buyer suffered major financial setback
incapacitating him to continue paying so that car was
subsequently repossessed. When reacquired, the car was appraised
to have a fair value of P 600,000.

3. What is the deferred gross profit at the end of the year?

4. What is the realized gross profit on installment sales during the
The following trial balance was prepared for the Mats Corporation
on December 31, 2017.
Cash 50,000
Installment accounts receivable, 2017 160,000
Installment accounts receivable, 2016 40,000
Installment accounts receivable, 2015 10,000
Accounts Receivable 80,000
Inventory, 12/31/16 60,000
Other Assets 104,000
Accounts Payable 150,000
Deferred gross profit, 2016 192,000
Deferred gross profit, 2015 45,000
Capital stock 200,000
Retained earnings 89,000
Sales 384,000
Installment sales 1,000,000
Purchases 910,000
Repossessed merchandise 20,000
Cost of installment sales 620,000
Shipments on instalment sales 620,000
Loss on repossession 26,000
Operating expenses 600,000
Total 2,680,000 2,680,000
The following account balances were found in the post-closing trial
balance prepared at the beginning of 2017
Installment accounts receivable, 480,000
Installment accounts receivable, 100,000
Deferred gross profit, 2016 192,000
Deferred gross profit, 2015 45,000

The inventory of new and repossessed merchandise on December 31, 2017

was P70,000. At the end of December, before preparing the trial
balance. The bookkeeper made the following incomplete entry:
Repossessed merchandise 20,000
Loss on repossession 26,000
Installment accounts receivable, 10,000
Installment accounts receivable, 20,000
Installment accounts receivable, 16,000

5. The total realized gross profit in 2017 must be:

6. The total deferred gross profit in 2017 must be:
7. The loss on repossession must be:

8. Drebin started operations on January 1, 2016 selling home

appliances and furniture on instalment basis. For 2016 and 2017,
the following represented operational details.
In thousand Pesos
2016 2017
Installment Sales 2400 3000
Cost of Installment 1,440 2,100
2016 installment 1260 900
2017 installment 1800
On January 7, 2018 an instalment sale account in 2016 defaulted
and the merchandise with a market value of 30,000 was
repossessed. The related instalment receivable balances as of
date of default and repossession was P48,000. The balance of the
unrealized gross profit as of the end 2016 is ______________.

9. MM Company began operations on January 1, 2011 and appropriately

uses the instalment method of accounting. The following data are
available for 2008:
2011 2012
Installment Receivable 1,200,000 1,500,000
Cash Collections from:
2011 Sales 400,000 500,000
2012 Sales 600,000
Gross profit on sales 30% 40%
The realized gross profit for 2012 is:
10. CPA Company, which began business on January 1, 2011
appropriately, uses the instalment sales method of accounting.
The following data are available for 2008:
Installment account receivable 200,000
Deferred gross profit, 12/31/11
(Before recognition of realized gross profit) 140,000

Gross profit on sales 40%

The cash collections and the realized gross profit on

instalment sales for the year ended December 31, 2011 should

11. The books of Henry Co. show the following balances on

December 31, 2012:
Account Receivable 313,750
Deferred gross profit (before adjustment) 38,000
Analysis of the account receivable reveal the following:
Regular Account 207,500
2011 Installment accounts 16,250
2012 Installment accounts 90,000
Sales on an instalment basis in 2011 were made at 30% above
cost; in 2012 at 33 1/3 above cost. Expenses paid was 1,500
relating to instalment sales. How much is the net income on
instalment sales?

12. DJ Co. accounts for instalment sales on the instalment

basis. On January 1, 2012, ledger account included the following
Installment Receivable 2010 38,500
Installment Receivable 2011 155,000
Deferred Gross Profit 2010 11,550
Deferred Gross Profit 2011 62,000
On December 31, 2012 account balances before adjustments for
realized gross profit on instalment sales were:
Installment Receivable 2010 none
Installment Receivable 2011 42,000
Installment Receivable 2012 100,500
Deferred Gross Profit 2010 11,550
Deferred Gross Profit 2011 62,000
Deferred Gross Profit 2012 75,810

Installment sales in 2012 were made at 42% above cost of

The total realized gross profit on instalment sales in 2012:

13. The Central Plains Subdivision sells residential subdivision

lots on instalment basis. The following information was taken
from the companys records as at December 31, 2011:
Installment Account Receivable
January 1, 2011 755,000
December 31, 2011 840,000
Unrealized gross profit, 1/1/11 339,750
Installment sales 950,000

How much is the balance of Unrealized Gross profit as at

December 31, 2011?

The following selected accounts appeared in the trial balance of Union

Sales as of December 31, 2012:
Debit Credit
Installement Receivable- 2011 Sales 15,000
Installement Receivable- 2012 Sales 200,000
Inventory, December 31, 2011 70,000
Purchases 555,000
Repossession 3,000
Installment sales 425,000
Sales (Regular) 385,000
Unrealized Gross profit 2011 54,000

Additional Information:
Installment Receivable- 2011 sales, as of
December 31, 2011 120,000
Inventory of new and repossessed merchandise
As of December 31, 2012 95,000
Gross profit percentage of regular sales
During the year 30% on sales
Repossession was made during the year. It was a
2011 sale and the corresponding uncollected
Account at the time of repossession was 7,750.
Compute the total realized gross profit on instalment sales in 2012
and the gain (loss) on repossession in 2012.
14. Gloria Corporation started operations on January 1, 2011
selling home appliances and furniture sets both for cash and an
instalment basis. Data on the instalment sales operations of the
company gathered for the years ending December 31, 2011 and 2012
were as follows:
2011 2012
Installment Sales 400,000 500,000
Cost of instalment sales 240,000 350,000
Cash collected on I/S
2011 I/S 210,000 150,000
2012 I/S 300,000
Additional Information: On January 5, 2013 an instalment sale in
2011 was defaulted and the merchandise with an appraised value of
P5,000 was repossessed. Related instalment receivable balance on
January 5, 2013 was 8,000.
Compute the deferred gross profit on December 31, 2012 and the gain or
loss on repossession in 2013.
15. Jane enterprises uses the installement method of accounting
and it has the following data at year end:
Gross margin on cost...........................66-2/3%
Unrealized Gross Profit........................192,000
Cash collections including down payment........360,000
What was the total amount of sales on I/S?

16. The Cindy Inc. began operating at the beginning of the

calendar year 2011 and using the instalment method of accounting,
presented the following data for the first year:
Installement sales.........................400,000
Gross margin based on cost................. 66-2/3%
Inventory 12/31/2011.......................80,000
General and administrative expenses........40,000
Accounts Receivable........................320,000

The balance of the deferred gross profit account, end of

2011 should be:

17. These data pertain to instalment sales of KBOB Store:

- Down payment : 20%
- Installment Sales: 545,000 in 2010; 785,000 in 2011; and
968,000 in 2012.
- Mark-up on cost: 35%
- Collections after down payment: 40% in the year of sale,
35% in the year after and 25% in the third year.
Compute the (1) Installement Accounts Receivable at the end of
2012 and (2) total unrealized gross profit at the end of 2012.
18. The Mercy sale Co. employs the perpetual inventory basis in
its accounting for new cars. On August 15, 2011, a new car was
sold to Rose Castro with a list price of 220,000 costing 165,000.
It granted Ms. Castro an allowance of 85,000 for her old car as
trade-in, the current value of which was estimated to be 81,700.
The balance of 135,000 was payable as follows: Cash at time of
purchases, 35,000 balance in 20 monthly payment of P5,000, first
payment being made on September 1, 2011. On April 1, 2012, Ms.
Castro defaulted in the payment of March 1, 2012 installment. The
new car sold was repossessed its value to the seller is 40,000.
Use two decimal places for gross profit percentage.
Compute the total realized gross profit on instalment sales in
2011 and gain (loss) on repossession in 2012.

19. The Molina Furniture Company appropriately used the

instalment sales method in accounting for the following
instalment sale. During 2011, Molina sold furniture to an
individual for 3,000 at a gross profit of 1,200. On June 1, 2011,
this instalment AR had a balance of 2,200 and it was determined
that no further collections would be made. Molina therefore,
repossessed the merchandise. When reacquired, the merchandise was
appraised as being worth only 1,000.In order to improve its
saleability, Bengal incurred cost of 100 reconditioning. Normal
profit on resale is 200. What should be the gain/loss on
repossession attributable to this merchandise?
20. Spicer Corp. has a normal gross profit on instalment sales
of 30%. A 2009 sale resulted in a default early in 2011. At the
date of default, the balance of the instalment receivable was
24,000, and the repossessed merchandise had a fair market value
of 13,500. Assuming the repossessed merchandise is to be recorded
at fair value, the gain or loss of repossession should be?
21. JCF Furniture uses the instalment sales method. No further
collections could be made on an account with a balance of 18,000.
It was estimated that the repossessed furniture could be sold as
is for 5,400 or for 6,300 if 300 were spent reconditioning it.
The gross profit rate on the original sale was 40%. The loss on
repossession was amounted to?
22. The Trial balance of BULACAN Appliance Corporation as of the
end of the fiscal year on September 30, 2012 is:
Debit Credit
Account Receivable 100,000
Accounts Payable 100,000
Allowance for depreciation 33,750
Capital Stock 125,000
Cash 46,250
Deferred Gross profit- 2011 50,000
Equipment 112,500
Installment receivable-2011 12,500
Installment receivable-2012 150,000
Installment Sales 375,000
Inventory, Sept, 30, 2011 62,500
Loss on repossession 3,750
Prepaid expenses 3,750
Purchases 435,000
Repossessions 2,500
Retained Earnings 30,000
Sales 312,000
Selling and admin expenses 97,500
Total 1,026,250 1,026,250

The post closing trial balance on Sept. 30, 2011 shows the
following balances of certain accounts:
Installment Receivable 2011 100,000
Deferred Gross profit 2011 50,000
The gross profit percentage for regular sales during the
year was 30%.
The accountant made the following entry for the repossession
on a sale of 2011 towards the end of fiscal year:
Repossession 2,500
Loss on repossession 3,750
Installment Receivable- 2011 6,250
The inventory of new and repossessed merchandise on Sept.
30, 2012 amounted to 75,000.
Compute the total realized gross profit for the year
September 20, 2012?
The correcting entry for repossession made on sale of 2011
Compute the net income for the fiscal year September 30,