2. On November 1, 2020, Speed Motor whichmaintains a perpetual inventoryrecord solda newautomobiketo Rapids for P6,800,000. The cost of the car to the seller was P5,205,000.The buyer paid30%downandreceived P640,000 allowance on an old cartraded, the balancebeing payabkein equal monthly installment payments commencing the month of sale.The monthly amortization was P240,000 inclusive of 1 2% interest on the unpaid amount of the obligation.The car traded-in has a wholesale value of P960,000 after expending reconditioning cost of P180,000.After paying three installments, the buyer defaulted and the car was subsequently repossessed. Whenreacquired, the car was appraised to have a fair value of P2,400,000.How much is the realized gross profit on installment sales during 2020?

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Answered: 2. On Novemb co Rapids for!

Business

Accounting

2. On Novemb co Rapids for!

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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Question

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2. On November 1, 2020, Speed Motor whichmaintains a perpetual inventoryrecord solda newautomobike
to Rapids for P6,800,000. The cost of the car to the seller was P5,205,000.
The buyer paid30%downandreceived P640,000 allowance on an old cartraded, the balancebeing payabke
in equal monthly installment payments commencing the month of sale.
The monthly amortization was P240,000 inclusive of 1 2% interest on the unpaid amount of the obligation.
The car traded-in has a wholesale value of P960,000 after expending reconditioning cost of P180,000.
After paying three installments, the buyer defaulted and the car was subsequently repossessed. When
reacquired, the car was appraised to have a fair value of P2,400,000.
How much is the realized gross profit on installment sales during 2020?

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