1. Trekker Company reports gross profit on the installment basis. The following data are available201820192020Installment salesCost of goods – installment salesGross profit240,000180,00060,000250,000181,25068,750300,000216,00084,000Collections2018 installment contracts2019 installment contracts2020 installment contracts75,00047,50072,50080,00062,50045,000DefaultsUnpaid balance of 2018 installment contractsValue assigned to repossessed merchandiseUnpaid balance of 2019 installment contractsValue assigned to repossessed merchandise15,0006,00016,0009,00012,5006,500REQUIRED: COMPUTE THE REALIZED GROSS PROFIT BEFORE LOSS ON REPOSSESSIONFOR 2020 AND THE LOSS ON REPOSSESSION FOR 2020.

Repossession: Repossession means claiming back the property sold, if the borrower makes any default…

1. Trekker Company reports gross profit on the installment basis. The following data are available 2018 2019 2020 Installment sales Cost of goods – installment sales Gross profit 240,000 180,000 60,000 250,000 181,250 68,750 300,000 216,000 84,000 Collections 2018 installment contracts 2019 installment contracts 75,000 47,500 72,500 80,000 62,500 45,000 2020 installment contracts Defaults Unpaid balance of 2018 installment contracts Value assigned to repossessed merchandise Unpaid balance of 2019 installment contracts Value assigned to repossessed merchandise REQUIRED: COMPUTE THE REALIZED GROSS PROFIT BEFORE LOSS ON REPOSSESSION FOR 2020 AND THE LOSS ON REPOSSESSION FOR 2020, 15,000 6,000 16,000 9,000 12,500 6,500

1. Trekker Company reports gross profit on the installment basis. The following data are available 2018 2019 2020 Installment sales Cost of goods – installment sales Gross profit 240,000 180,000 60,000 250,000 181,250 68,750 300,000 216,000 84,000 Collections 2018 installment contracts 2019 installment contracts 75,000 47,500 72,500 80,000 62,500 45,000 2020 installment contracts Defaults Unpaid balance of 2018 installment contracts Value assigned to repossessed merchandise Unpaid balance of 2019 installment contracts Value assigned to repossessed merchandise REQUIRED: COMPUTE THE REALIZED GROSS PROFIT BEFORE LOSS ON REPOSSESSION FOR 2020 AND THE LOSS ON REPOSSESSION FOR 2020, 15,000 6,000 16,000 9,000 12,500 6,500

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Bad Debts

At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.

Accounts Receivable

The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

Question

1. Trekker Company reports gross profit on the installment basis. The following data are available
2018
2019
2020
Installment sales
Cost of goods – installment sales
Gross profit
240,000
180,000
60,000
250,000
181,250
68,750
300,000
216,000
84,000
Collections
2018 installment contracts
2019 installment contracts
2020 installment contracts
75,000
47,500
72,500
80,000
62,500
45,000
Defaults
Unpaid balance of 2018 installment contracts
Value assigned to repossessed merchandise
Unpaid balance of 2019 installment contracts
Value assigned to repossessed merchandise
15,000
6,000
16,000
9,000
12,500
6,500
REQUIRED: COMPUTE THE REALIZED GROSS PROFIT BEFORE LOSS ON REPOSSESSION
FOR 2020 AND THE LOSS ON REPOSSESSION FOR 2020.

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