Special Transactions

Portia Co. uses the installment method of income recognition. The entity provided the following pertinent data: 2011 20:2 20:3 Installment sales P600.000 W50.000 P720.000 Cost of goods sold 450.000 570.000 504.000 Balance of deferred gross profit at year-end 20x1 105.000 30.000 - 20x2 103.000 18.000 20x3 144.000 REQUIRED: 1. Total balanoe of Installment Receivable on December 31. 20x3 Reginald Company. which began operations on January 5. 20x1. appropriater uses the install method of revenue recognition. The following information pertains to the operations for 20x1 and 20:2: 2011 2032 Sales P800300 P900.000 Collections from: 20x1 sales 200.000 100.000 20x2 sales 300.000 Accounts written off from: 20x1 sales 50.000 150.000 20x2 sales 300.000 Gross profit rates 30% 40% REQUIRED: 2. Deferred gross profit on December 31. 20x2 3. Realized gross profit in 20x2 The following are the information related to instalment sales made by Bimbo Co.: 2011 201:2 Sales P200.000 P320000 Cost of Sales 160.000 224.000 Gross profit rate 20% 30% Installment receivable. 20x1 90.000 30.000 Installment receivable. 20x2 144.000 During 20x2. Bimbo Co. has repossessed a property sold to a defaulted customer in 20x1 for P25.000. Prior to repossession. P5000 were oollected from the buyer. The repossessed property has an estimated resale price of P22,000. Reconditioning costs amount to P3.000. The normal profit margin is 30%. REQUIRED: 4. Compute the gain or loss on repossession 5. Compute the total realized gross prot in 20x2 6. Net inoome recognized in 20x2