Abenson Trading Co. sells household furniture both in cash and in installment basis. For each installment sale, a sale contract is made whereby the following terms are stated: a. A down payment of 25% of the installment price is required and the balance payable in 15 equal monthly installment. b. Interest of 1% per month is charged on the unpaid cash sale price-equivalent at each installment. c. The price on installment sales is 110% of the cash sales price. For accounting purposes, installment sales are recorded at contract price. Any unpaid balances on defaulted contracts are being charged to uncollectible accounts expense. Sales of defaulted merchandise were credited to uncollectible accounts expense. Interest are recognized in the period earned. For its first year of operations ending December 31, 2009, the books of the company show the following: A contract amounting to P3,300 was defaulted after paying three(3) monthly installments. The total interest earned for the first four month in the defaulted contracts is: a. 72.07 b. 69.30 c. 80.85 d. 60.94 e. answer not given
Abenson Trading Co. sells household furniture both in cash and in installment basis. For each installment sale, a sale contract is made whereby the following terms are stated: a. A down payment of 25% of the installment price is required and the balance payable in 15 equal monthly installment. b. Interest of 1% per month is charged on the unpaid cash sale price-equivalent at each installment. c. The price on installment sales is 110% of the cash sales price. For accounting purposes, installment sales are recorded at contract price. Any unpaid balances on defaulted contracts are being charged to uncollectible accounts expense. Sales of defaulted merchandise were credited to uncollectible accounts expense. Interest are recognized in the period earned. For its first year of operations ending December 31, 2009, the books of the company show the following: A contract amounting to P3,300 was defaulted after paying three(3) monthly installments. The total interest earned for the first four month in the defaulted contracts is: a. 72.07 b. 69.30 c. 80.85 d. 60.94 e. answer not given
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Abenson Trading Co. sells household furniture both in cash and in installment basis. For each installment sale, a sale contract is made whereby the following terms are stated:
a. A down payment of 25% of the installment price is required and the balance payable in 15 equal monthly installment.
b. Interest of 1% per month is charged on the unpaid cash sale price-equivalent at each installment.
c. The price on installment sales is 110% of the cash sales price.
For accounting purposes, installment sales are recorded at contract price. Any unpaid balances on defaulted contracts are being charged to uncollectible accounts expense. Sales of defaulted merchandise were credited to uncollectible accounts expense. Interest are recognized in the period earned. For its first year of operations ending December 31, 2009, the books of the company show the following:
A contract amounting to P3,300 was defaulted after paying three(3) monthly installments. The total interest earned for the first four month in the defaulted contracts is:
a. 72.07
b. 69.30
c. 80.85
d. 60.94
e. answer not given
Transcribed Image Text:Cash sales
378,000
Installment sales
794,970
Merchandise inventory, January 1
174,180
Purchases
627,891
Merchandise inventory, December 31
108,630
Cash collections on installment contracts:
Down payment
Installment payments (include interest of P27,758.52).
Average 6 monthly
Installment on all contracts except on
198,750
Defaulted contracts.
238,023
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