A company sells inventory costing $15,000 to a customer for $20,000. Because of significant uncertainties surrounding the transaction, the installment sales method is viewed as proper. In the first year, the company collects $5,700. In the second year, the company collects another $8,000. What amount of profit should the company recognize in the second year? a. $2,000 b. $3,000 c. $4,000 d. $5,000
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- An entity was offering premium as a sales promotion scheme and that during the year it purchased 10,000 premiums for P20 each. Customers need to remit 10 boxes and P5 to redeem one premium. Assume there were no redemptions during the first year of the promotion, which of the following statements would be correct if it uses the revenue approach? a. The entity will report an inventory of premiums at the net cost of P15. Tb. he entity will report an estimated liability equal to the premium expense. c. None of the other choices are correct. Td. he entity will not report any expense since there were no redemption. e. No accounting liability shall be recognized since there were no redemptions.Sword Co. has just ended the calendar year making a sale in the amount of P250,000 of merchandise purchased during the year at a total cost of P150,000. Although the firm paid in full for the merchandise during the year, it only collected 10,000 at year end from the customer. The net profit and cash flow from this sale for the year are? A. P50,000 and -P140,000 respectively B. P50,000 and -P150,000 respectively C. P50,000 and P250,000 respectively D. P250, 000 and -P20,000 respectivelyNational Co. has just ended the calendar year making a sale in the amount of P250,000 of merchandise purchased during the year at a total cost of P150,000. Although the firm paid in full for the merchandise during the year, it only collected 10,000 at year end from the customer. The net profit and cash flow from this sale for the year are A. P50,000 and P250,000, respectively. B. P50,000 and -P150,000, respectively. C. P250,000 and -P20,000, respectively. D. 50,000 and -P140,000, respectively.
- In the current year, Borden Corporation had sales of $2,000,000 and cost of goods sold of $1,200,000. Borden expects returns in the following year to equal 8% of sales. The unadjusted balance in Inventory Returns Estimated is a debit of $6,000, and the unadjusted balance in Sales Refund Payable is a credit of $10,000. The adjusting entry or entries to record the expected sales returns is (are): (A) Accounts Receivable 2,000,000 Sales 2,000,000 (B) Sales returns and allowances 150,000 Sales 150,000 Cost of Goods Sold 90,000 Inventory Returns Estimated 90,000 (C) Sales 2,000,000 Sales Refund Payable 160,000 Accounts receivable 1,840,000 Sales Refund Payable 150,0000 Accounts receivable 150,000 (D) Sales Returns and Allowances 150,000 Sales Refund Payable 150,000 Inventory Returns Estimated 90,000 Cost of goods sold 90,000Heller Company offers an unconditional return policy to its customers. During the current period, the company records total sales of $850,000, with a cost of merchandise to Heller of $340,000. Based on past experience, Heller Company expects 4% of sales to be returned. How much gross profit will Heller Company recognize for the current period? Select one: A. $510,000 B. $816,000 C. $489,600 D. $360,400 E. $850,0007.
- What is the estimated cost of goods sold for the current year? Problem 13-3 (AICPA Adapted) The following information is available for the current year: Wecent history, the entity had a gross profit of 25% on sales. Beginning inventory Purchases Purchase returns Sales Sales returns Sales allowances Uhat is the estimated cost of goods sold for the current year? 520,000 4,120,000 60,000 5,600,000 400,000 100,000 a. 3,360,000 b. 3,830,000 c. 3,900,000 d. 3,825,000Use the following information for the next three (3) questions: Wilamill Company showed pre-tax income of P2,500,000 for the year ended December 31, 2025. On your year-end verification of the transactions of the Company, you discovered the following errors: P1,000,000 worth of merchandise was purchased in 2025 and included in the ending inventory. However, the purchase was recorded only in 2026. A merchandise shipment valued at P1,500,000 was properly recorded as purchases at year-end. The merchandise was inadvertently omitted from the physical count, since it has not arrived by December 31, 2025. Value added tax for the fourth quarter of 2025, amounting to P500,000, was included in the Sales account. Rental of P300,000 on an equipment, applicable for six months, was received on November 1, 2025. The entire amount was reported as revenue upon receipt. Rent paid on building covering the period from July 1, 2025 to July 1, 2026, amounting to P1,200,000, was paid and recorded as expense…. Purchases for the year ended December 31, 2020 should amount to: *A. 4,500,000B. 4,527,000C. 4,631,000D. 5,727,000