Company recognizes profit on credit sales on an installment basis. At the end of 20x2, before the accour e adjusted, the ledger shows the following: stallment receivable, 20x1 stallment receivable, 20x2 P675,000 1,050,000 ferred gross profit, 20x1 eferred gross profit, 20x2 gular sales st of regular sales P370,000 545,000 3,000,000 1,920,000 ch year the gross profit on installment sales was 8% lower than the regular sales. In 20x2, the gross pr installment sales was 4% higher than 20x1. EQUIRED: Compute for the following: 1. Adjusted deferred gross profit balance (DGP) in 20x2 2. Total realized gross profit (RGP) in 20x2
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.
![CASE 2
Rusty, Inc. reports gross profit on installment basis. The following data are available:
20X2
P500,000
362,500
137,500
20X1
20X3
Sales
P480,000
360,000
120,000
P600,000
432,000
168,000
Cost of Sales
Gross profit
Cash Collections
150,000
95,000
From 20x1 Sales
90,000
145,000
160,000
125,000
From 20x2 Sales
From 20x3 Sales
Defaults
25,000
13,000
Unpaid balance of 20x1 installment contracts
Value assigned to repossessed merchandise
Unpaid balance of 20x2 installment contracts
Value assigned to repossessed merchandise
30,000
12,000
32,000
18,000
REQUIRED:
3. Total realized gross profit before loss on repossession for 20x3
4. Loss on repossession for 20x3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9f9b958f-8c61-4103-a300-6adb9e7b011a%2F30f2d7f9-a60a-4be0-858f-58bdf3547f87%2F9en5orq_processed.png&w=3840&q=75)
![CASE 1
TJ Company recognizes profit on credit sales on an installment basis. At the end of 20x2, before the accounts
are adjusted, the ledger shows the following:
Installment receivable, 20x1
Installment receivable, 20x2
Deferred gross profit, 20x1
Deferred gross profit, 20x2
Regular sales
Cost of regular sales
P675,000
1,050,000
P370,000
545,000
3,000,000
1,920,000
Each year the gross profit on installment sales was 8% lower than the regular sales. In 20x2, the gross profit
on installment sales was 4% higher than 20x1.
REQUIRED: Compute for the following:
1. Adjusted deferred gross profit balance (DGP) in 20x2
2. Total realized gross profit (RGP) in 20x2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9f9b958f-8c61-4103-a300-6adb9e7b011a%2F30f2d7f9-a60a-4be0-858f-58bdf3547f87%2Fmdxc9_processed.png&w=3840&q=75)
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