INSTALLMENT SALES- AAC and BAC
The Central Plain Subdivision sells residential subdivision lots in installment. The following
information was taken from the accounting records of Central Plain Subdivision as at Dec. 3! "#$%
&nstallment Accounts 'eceivable! (an. )"#* contracts+
P,$$!###
&nstallment 'eceivable! Dec. 3  )"#$ contract+
*#!###
&nstallment Accounts 'eceivable! Dec. 3 )"#* contracts+
##!###
/nreali0ed 1ross Profit! (an.  )"#* contracts+
332!,$#
&nstallment Sales
2$#!###
"#$ contracts gross 4rofit rate is $5 lower than that of "#*.
6uestion . 1ive the reali0ed gross 4rofit to be recogni0ed in "#$.
6uestion ". 1ive the balances of the unreali0ed gross 4rofit in Dec. 3! "#$.
7ahangin Com4an8 which began o4eration in "#* sells air cooling a44liances and free0ers in
installment basis. The following information is given to 8ou for "#$%
Total cash collections )a third coming from "#* contracts+
P,"!*"$
Down 4a8ment received in "#$
"$#!###
Deferred 1ross Profit! Dec. 3 for "#$ sales
*$!$##
1ross Profit 'atio for "#$
3$5
1P' for "#* was "5 lower than the current ratio
&nstallment 'eceivable! Dec 3 )"#* contracts+.
P,!$"$
3.
*.
$.
.
,.
9hat is the total amount of sales revenue for "#$ contracts:
9hat is the cost of sales for "#$ contracts:
;ast " entries at the end of 8ear.
/nder accrual method! what will be reali0ed gross 4rofit at the end of "#$:
&f instalment sales for "#* was P,$#!###! using cost recover8 method! how much will reali0ed
gross 4rofit be in "#$ for the "#* contracts.:
S<;/T&<=
P'<B;>7 A
.+
1P'
)332.,$?,$$+
C<;;>CT&<=S ,$$-##
'>A;&@>D 1P
2.)
/='>A;&@>D 1P )332.,$-2.,$+
"#*
*$5
$$!###
)*$-$+
)2$#-*#+
2!,$#
P270,000
P'<B;>7 B
3+ &=STA;;7>=T '>CB;> "?3 *$!$##?3$5
ADD BAC C<;;>CT&<=S ,"!*"$  "?3
&=STA;;7>=T SA;>S
(*#  *#5+
"#$
*#5
#!###
T<TA;
**!###
P 113,750
P336,000
P!33#!###
*,*!2$#
P1,804,950
*+ SA;>S !#*!2$#  C<ST 'AT&< $5 )##-3$+  C<ST <E SA;>S P1,173,217.50
$+ '1P E'<7 "#* C<=T'ACTS ),"!*"$ ?3 "3,!*,$  335  P,!3.,$
'1P E'<7 "#$ C<=T'ACTS )*,*!2$#  3$5  P!"3".$#
+ &=STA;;7>=T SA;>S
C<ST <E &=ST SA;>S
D>E>''>D 1P- "#$
D>E>''>D 1P-"#*
D>E>''>D 1P-"#$
'>A;&@>D 1P
P!#*!2$#
P!,3!",.$#
3!,3".$#
P,!3.,$
!"3".$#
P"**!$22."$
7) SA;>S <E P!#*!2$# ;>SS C<ST <E SA;>S !,3!",.$#  '>A;&@>D 1P P631,732.50
8) SA;>S <E ,$#!###  ,5  T<TA; C<ST T< B> '>C<F>'>D P$#"!$## B>E<'>
'>C<F>'G <E P'<E&T
COLLECTIONS
IN 2014 P325,000
IN 2015 P237,475
RECOVERY OF COST
325,000
177,500
Add back ending balance to collections  beg balance of recble! thus
RECOVERY OF PROFIT
59,975
,!$"$  "3,!*,$ *"$!###
INSTALLMENT SALES- CAC and DAC
,$#!### H *"$!### C<;;>CT&<=S &= "#* P3"$!###
The Central Plain Subdivision sells residential subdivision lots in installment. The following
information was taken from the accounting records of Central Plain Subdivision as at Dec. 3! "#$%
&nstallment Accounts 'eceivable! (an. )"#* contracts+
&nstallment 'eceivable! Dec. 3  )"#$ contract+
&nstallment Accounts 'eceivable! Dec. 3 )"#* contracts+
/nreali0ed 1ross Profit! (an.  )"#* contracts+
&nstallment Sales
P,$$!###
*#!###
##!###
"*!"$#
2$#!###
"# contracts gross 4rofit rate is $5 lower than that of "#*.
6uestion . 1ive the reali0ed gross 4rofit to be recogni0ed in "#$.
6uestion ". 1ive the balances of the unreali0ed gross 4rofit in Dec. 3! "#$.
7ahangin Com4an8 which began o4eration in "#* sells air cooling a44liances and free0ers in
installment basis. The following information is given to 8ou for "#$%
Total cash collections )a third coming from "#* contracts+
P,"!*"$
Down 4a8ment received in "#$
"$#!###
Deferred 1ross Profit! Dec. 3 for "#$ sales
*$!$##
1ross Profit 'atio for "#$
*#5
1P' for "#* was "5 lower than the current ratio
&nstallment 'eceivable! Dec 3 )"#* contracts+.
P,!$"$
.
2.
#.
.
".
9hat is the total amount of sales revenue for "#$ contracts:
9hat is the cost of sales for "#$ contracts:
;ast " entries at the end of 8ear.
/nder accrual method! what will be reali0ed gross 4rofit at the end of "#$:
&f instalment sales for "#* was P,$#!###! using cost recover8 method! how much will reali0ed
gross 4rofit be in "#$ for the "#* contracts.:
S<;/T&<=
P'<B;>7 A
.+
1P'
)"*."$?,$$+
C<;;>CT&<=S ,$$-##
'>A;&@>D 1P
2.)
/='>A;&@>D 1P )"*."$-$*."$+
OR 600,000 X 35
"#*
3$5
$$!###
)3$-$+
)2$#-*#+
$*!"$#
P210,000
P'<B;>7 B
3+ &=STA;;7>=T '>CB;> "?3 *$!$##?*#5
ADD BAC C<;;>CT&<=S ,"!*"$  "?3
&=STA;;7>=T SA;>S
(*#  3#5+
"#$
3#5
#!###
T<TA;
33!###
P, ,250
P252,000
P!3!,$#
*,*!2$#
P1,638,700
*+ SA;>S !3!,##  C<ST 'AT&< #5 )##-*#+  C<ST <E SA;>S P983,220
$+ '1P E'<7 "#* C<=T'ACTS ),"!*"$ ?3 "3,!*,$  35  P2#!"*#.$#
'1P E'<7 "#$ C<=T'ACTS )*,*!2$#  *#5  P2!2#
&=STA;;7>=T SA;>S
C<ST <E &=ST SA;>S
D>E>''>D 1P- "#$
P!3!,##
D>E>''>D 1P-"#*
D>E>''>D 1P-"#$
'>A;&@>D 1P
P2#!"*#.$#
2!2#.##
P23!""#
$$!*#
P"#!""#.$#
6) '>A;&@>D 1P P655,480 !"#"! $% "&$!' #%! "#"!!") !%** +!%#$ & &%. 5
7) SA;>S <E ,$#!###  "5  T<TA; C<ST T< B> '>C<F>'>D P*$!### B>E<'>
'>C<F>'G <E P'<E&T
COLLECTIONS
IN 2014 P325,000
IN 2015 P237,475
RECOVERY OF COST
325,000
140,000
RECOVERY OF PROFIT
97,475
Add back ending balance to collections  beg balance of recble! thus
,!$"$ I "3,!*,$ *"$!###
,$#!### H *"$!### C<;;>CT&<=S &= "#* P3"$!### as recover8 of cost! balance of cost to
be recovered in "#$