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CLASSROOM DRILL MARCO, INCL, which began operations on January 1, 2017, appropriately uses the installment method of accounting to record revenues. The following information is available for the years ended December 31, 2017 and 2018: 201 7 20 18 Sales P1,000,000 P2,000,000 Gross prot realized on sales made in: 2017 150,000 90,000 2018 - 200,000 Gross prot percentages 30% 40% 1. What amount of installment accounts receivable should MARCO, INC. report in its December 31, 2018 balance sheet? a. P1,225,000 c. 91,700,000 b. P1,300,000 d. P1,775,000 On December 31, 2017r MARVIN COMPANY sold construction equipment to Dream Company for P1,800,000. The equipment had a carrying amount of P1,200,000. Dream paid P300,000 cash on December 31, 2017 and signed a P1,500,000 note bearing interest at 10%, payable in five annual installments of P300,000. MARVIN COMPANY appropriately accounts for the sale under the installment method. On December 31, 2018, Dream paid P300,000 principal and P150,000 interest. 2. For the year ended December 31. 2018, what total amount of revenue should Miller recognize from the construction equipment sale and financing? a. $050,000 c. P120,000 b. P150,000 d. P100,000 NIKKI COPORATION. started operations on January 1, 2017 selling home appliances on installment basis. For 2017 and 2018, the following represented operational details for NIKKI: 2017 2018 Installment sales P1,200,000 P1,500,000 Cost of installment sales 720,000 1,050,000 Collections on installment sales From 2017 sales 630,000 450,000 From 2018 sales 900,000 On January 7, 2018, an installment sales aocount in 2015 defaulted and the merchandise with a market value of P15,000 was repossessed. The related installment receivable balance as of date of defaults and repossessions was P24,000. 3. The balance of the unrealized gross prot as of d1e end of 2017 was a. 0220,000 b. P192,000 c. P360,000 d. P275,000 Page 4 of5 www.9rtc.com.ph P22404 EXCEL PROFESSIONAL SERVICES, INC CANDY ENTERPRISES, which began operations on January 3, 201?, appropriately uses the installment method of revenue recognition. The following information pertains to CANDY'S operations for 201? and 2018. 201? 20 18 Sal es P300,000 P45 0,000 Ccl lections from 201? sales 100,000 50,000 2018 sales 150,000 Accounts written off from 201? sales 25,000 ?5,000 2018 sales 150,000 Gross prot rates 30% 40% 4. What amount should CANDY ENTERPRISES report as total deferred gross prot in its December 31, 2018 balance sheet for 201? and 2018 sales? a. P112,500 c.P125,000 b. P 75,000 d.P 00,000 ULLIE TRADING which began operations on January 1, 2018, appropriately uses the installment method of accounting. The following information pertains to ULLIE's operations for the year 2018. Installment sales P 500,000 Regular sales 300,000 Cost of installment sales 250,000 Cost of regular sales 150,000 General and administrative expenses 50,000 Collections on installment sales 100,000 5. In its December 31, 2018 balance sheet, what amount should Great report as deferred gross prot? a. P250,000 c. P160,000 b. P200,000 d. P?5,000 6. In its income statement for 2018, what amount of realized gross prot should Great report? a. P160,000 c. P200,000 b. P ?5,000 (1. P250,000 Since there is no reasonable basis for estimating the degree of oollectability, ALECKS INCORPORATED uses the installment method of revenue recognition for the following sales: Sales P 900,000 P 600,000 Collections from 201? sales 100,000 200,000 2018 sales 300,000 Accounts written off: 201? sales 150,000 50,000 2018 sales 50,000 Gross prot percentage 40% 30% ?. What amount should ALECKS report as deferred gross prot in its December 31, 2018 balance sheet. a. P150,000 c. P225,000 b. P160,000 d. P250,000 KYLE ORIGINALS, which began operations on January 2, 2018, appropriately uses the installment sales method of accounting. The following information is available for 2018: Installment accounts receivable, December 31, 2018 P800,000 Deferred gross prot, December 31, 2018 [before Recognition of realized gross profit for 2018] 560,000 Gross profit on sales 40% 8. For the year ended December 31, 2018, cash collections and realized gross prot on sales should be: Cash collections Realized gross prot a. P 400,000 P 320,000 b. P 400,000 P 240,000 c. P 600,000 P 320,000 (I. P 600,000 P 240,000 On January 2, 201?, RAM, INCORPORATED sold a used machine to Cooperation Enterprises for P900,000, resulting in a gain of P2?0,000. On that date, Cooperation paid P150,000 cash and signed a P?50,000 note bearing interest at 10%. The note was payable in three annual installments of P250,000 beginning January 2, 2018. RAM, INCORPORATED appropriately accounted for the sale under the installment method. Cooperation made a timely payment of the rst installment on January 2, 2018, of P325,000, which included accrued interest of P?5,000. 9. What amount of deferred gross profit should RAM, INCORPORATED report at December 31, 2018? a. P150,000 c. P180,000 b. P1?2,500 d. P225,000 The following information pertains to a sale of real estate by ROCCO LAND PROPERTIES to ALEIT REAL ESTATE, INC. on December 31, 201?: Carrying amount P2,000,000 Sales price: Cash P 300,000 Purchase money mortgage 2,?00,000 3,000,000 The mortgage is payable in nine annual installments of P300,000 beginning December 31, 2018, plus interest of 10%. The December 31, 2018 installment was paid as scheduled, together with interest of P2?0,000. ROCCO uses the cost recovery method to account for the sale. 10. What amount of income should ROCCO recognize in 2018 from the real estate sale and its financing? a. P5?0,000 c. P2?0,000 h. P3?0,000 d. P0 TENTEN CORPORATION sells goods on the installment basis. For the year just ended, the following were reported: Cost of installment sales, P560,000; Loss on repossession, P13,500; Fair value of repossessed merchandise, P112,500; Accounts defaulted, P180,000; Deferred gross profitend, P108,000. 11. How much was the collections during the year? a. P210,000 c. P390,000 b. P415,?15 d. P26051100 MAXINNE MOTORS sells locally manufactured jeeps on installments. Information presented below relates to MAXINNE's operations for the last three calendar years: 201? 2016 2015 Cost of installment sales P8,?65,625 P?,?00,000 P4,950,000 Gross prot on sales 32% 30% 28% Outstanding installment Receivables, 12.131 3mm 201? sales P9,?28,125 =rom 2016 sales P3,025,000 P8,33?,500 =rom 2015 sales 1,512,500 P4,812,500 12. MAXINNE uses the installment method of accounting. How much is the (1) total realized gross prot, and (2) deferred gross profit for calendar year 201?? a. {1] P3,?53,?50; (2) P4,020,500 b. (1) P6,993,250; (2) P3,113,000 c. (1) P3,044,250; (2) P4,125,000 d. (1) P3,044,250; (2) P4,020,500 LEI uses the installment method of accounting and it has the following data at yearend: Gross margin on cost Unrealized gross profit Cash collections including down payments 13. What was the total amount of sales on installment ba a. P480,000 c. P552,000 b. P648,000 d. P8405000 On June 1, 2018 ANCHO ENTERPRISES sells a new car P1,620,000 for P2,268,000. A used car is accepted as payment, P432,000 being allowed on the trade in. The u car can be resold for P486,000 after reconditioning cost of P64,800. The company expects to make a 20% gross prot on the sale of used cars. During the period P2?0,000 was collected on the contract. 14. How much is the realized gross prot in 2018? a. P 6?,500 C. P 118,800 b. P 148,500 d. P 1?5,500 60-21355 P192,0 Page 5 of 5 www.9rtc.com.ph P22404