2. On November 1,2020, Speed Motor whichmaintains a perpetual inventory recordsolda new automobile to Rapids for P6,800,000. The cost of the car to the seller was P5,205,000. The buyer paid30% downandreceived P640,000 allowance on an oldcar traded, the balancebeing payable in equal monthly installment payments commencing the month of sale. The monthly amortization was P240,000 inclusive of 12% interest on the unpaid amount of the obligation. The car traded-in has a wholesale value of P960,000 after expending reconditioning cost of P180,000. 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 P2,400,000. How much is the realized gross profit on installment sales during 2020?
2. On November 1,2020, Speed Motor whichmaintains a perpetual inventory recordsolda new automobile to Rapids for P6,800,000. The cost of the car to the seller was P5,205,000. The buyer paid30% downandreceived P640,000 allowance on an oldcar traded, the balancebeing payable in equal monthly installment payments commencing the month of sale. The monthly amortization was P240,000 inclusive of 12% interest on the unpaid amount of the obligation. The car traded-in has a wholesale value of P960,000 after expending reconditioning cost of P180,000. 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 P2,400,000. How much is the realized gross profit on installment sales during 2020?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 6P
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