INSTALLMENT SALES & CONSIGNMENT SALES
Problem 1
1. What is the gross profit rate in 2015 and 2016, respectively?
2015 2016
Installment Sales 1,200,000 1,500,000
Cost of I/S 720,000 1,050,000
Gross Profit 480,000 450,000
Gross Profit Rate 40% 30%
2. What is the Deferred Gross Profit as of 2016 from 2015 sales?
Installment Sales - 2015 1,200,000
Less: Collections during 2015 630,000
Less: Collections during 2016 450,000
Less: Accounts Defaulted 17,000 1,097,000
Installment Accounts Receivable - 2015 Sales 103,000
Deferred Gross Profit (P 103,000 x 40%) 41,200
3. How much is the amount of estimated resale value?
Fair value after reconditioning cost 15,000
Add: Disposal costs 3,000
Add: Normal profit (P 15,000 + 3,000 / 90% x 10%) 2,000
Estimated Resale Value 20,000
4. What is the amount to be debited as the value of repossessed merchandise?
Estimated resale value 20,000
Less: Reconditioning costs (5,000)
Less: Disposal costs (3,000)
Less: Normal profit (2,000)
Fair value of repossessed merchandise 10,000
5. How much is the gain or loss on repossession?
Fair value of repossessed merchandise 10,000
Less: Unrecovered cost (P 17,000 x 60%) 10,200
Loss on repossession (200)
6. How much is the realized gross profit in 2015?
Collections during 2015 630,000
Realized Gross Profit (P 630,000 x 40%) 252,000
7. How much is the realized gross profit in 2016?
Collections during 2016 from 2015 sales 450,000
Realized Gross Profit (P 450,000 x 40%) 180,000
Collections during 2016 from 2016 sales 900,000
Realized Gross Profit (P 900,000 x 30%) 270,000
Total RGP (P 180,000 + P 270,000) 450,000
Problem 2
1. How much is the fair value of traded-in merchandise?
Estimated resale value 162,000
Less: Reconditioning costs 8,100
Less: Normal profit (P 162,000 x 15%) 24,300 32,400
Fair value of traded-in merchandise 129,600
2. How much is the under/(over) allowance in trade-in?
Trade-in Allowance 194,400
Less: Fair Value of Traded-in Merchandise 129,600
Over-allowance 64,800
3. What is the gross profit rate?
Original Installment Sales 550,800
Less: Over allowance (64,800)
Adjusted Installment Sales 486,000
Less: Cost of Installment Sales (388,800)
Gross Profit 97,200
Gross Profit Rate (P 97,200 / P 486,000) 20%
4. How much is the monthly payment?
Adjusted Installment Sales 486,000
Less: FV of Traded-in Merchandise (129,600)
Less: Initial Cash Payment (32,400)
Installment Accounts Receivable 324,000
Monthly Payment (P 324,000 / ten months) 32,400
5. How much is the total realized gross profit in 2015?
FV of Traded-in Merchandise 129,600
Initial cash collection 32,400
Monthly cash collections (P 32,400 x 5) 162,000
Total collections 324,000
Realized gross profit in 2015 (P 324,000 x 20%) 64,800
Problem 3
1. The consignee sold the 6 refrigerators for a total of?
Amount remitted 1,365
Add: Marketing expenses 90
Add: Delivery and Installation of items sold 60
Add: Cartage cost paid upon receipt of consignment 15
Amount to be remitted after commissions 1,530
Consignment Sales, gross (P 1,530 / 85%) 1,800
2. The commission earned on the sale of the 6 refrigerators was?
Commissions (P 1,800 x 15%) 270
3. The consignor's net profit from the sale of the consigned goods was?
Consignment Sales 1,800
Less: Cost of Consignment
Unit Cost (P 180 x 6) 1,080
Portion of Freight (P 120 x 6/10) 72
Portion of Cartage Cost (P 15 x 6/10) 9 1,161
Less: Commission 270
Less: Marketing expenses 90
Less: Delivery and installation of items sold 60
Consignor's Net Profit 219
LONG-TERM CONSTRUCTION CONTRACTS
Problem 1
2014 2015 2016
Contract Price 13,125,000 13,125,000 13,125,000
Actual Cost Incurred to Date 6,562,500 10,968,750 11,625,000
Estimated Cost to Complete 4,375,000 1,218,750 -
Est. Total Costs at Completion 10,937,500 12,187,500 11,625,000
Est. Gross Profit at Completion 2,187,500 937,500 1,500,000
Percentage of Completion 60% 90% 100%
Realized Gross Profit to Date 1,312,500 843,750 1,500,000
Realized Gross Profit for the Period 1,312,500 (468,750) 656,250
Construction in Progress to Date 7,875,000 11,812,500 13,125,000
Progress Billings to Date 3,000,000 12,000,000 13,125,000
Excess of CIP over PB 4,875,000 (187,500) -
Revenue Earned to Date 7,875,000 11,812,500 13,125,000
Revenue Earned for the Period 7,875,000 3,937,500 1,312,500
Problem 2
2013 2014 2015 2016
Contract Price 65,000,000 65,000,000 65,000,000 65,000,000
Costs Incurred for the Period 15,000,000 6,700,000 24,500,000 16,800,000
Costs Incurred to Date 15,000,000 21,700,000 46,200,000 63,000,000
Est. Total Costs at Completion 60,000,000 62,000,000 66,000,000 63,000,000
Est. Gross Profit at Completion 5,000,000 3,000,000 (1,000,000) 2,000,000
Percentage of Completion 25% 35% 70% 100%
Realized Gross Profit to Date 1,250,000 1,050,000 (1,000,000) 2,000,000
Realized Gross Profit for the Period 1,250,000 (200,000) (2,050,000) 3,000,000
Construction in Progress to Date 16,250,000 22,750,000 45,200,000 65,000,000
Progress Billings 15,000,000 6,000,000 25,000,000 19,000,000
Progress Billings to Date 15,000,000 21,000,000 46,000,000 65,000,000
Construction in Progress, Net 1,250,000 1,750,000 (800,000) -
Revenue Earned to Date (GP) 16,250,000 22,750,000 45,200,000 65,000,000
Revenue Earned for the Period (GP) 16,250,000 6,500,000 22,450,000 19,800,000
Revenue Earned to Date (CP) 16,250,000 22,750,000 45,500,000 65,000,000
Revenue Earned for the Period (CP) 16,250,000 6,500,000 22,750,000 19,500,000
Actual Construction Cost (I/S) 15,000,000 6,700,000 24,800,000 16,500,000
