HC uses installment sales method in revenue recognition. The following information is provided in the records of Hale: 20X1 20X2 20X3 Sales P1,500,000 P1,250,000 P2,350,000 Cost of Sales 900,000 780,000 1,057,500 Cash Collections From 20x1 Sales 50,000 70,000 670,000 From 20x2 Sales 230,000 365,000 From 20x3 Sales 124,000 REQUIRED: Compute for the following: 1. Adjusted deferred gross profit balance in 20x1 2. Realized gross profit in 20x1 3. Adjusted deferred gross profit balance in 20x2
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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.
HC uses installment sales method in revenue recognition. The following information is provided in the records of Hale:
|
|
20X1 |
20X2 |
20X3 |
|
Sales |
P1,500,000 |
P1,250,000 |
P2,350,000 |
|
Cost of Sales |
900,000 |
780,000 |
1,057,500 |
|
Cash Collections |
|
|
|
|
From 20x1 Sales |
50,000 |
70,000 |
670,000 |
|
From 20x2 Sales |
|
230,000 |
365,000 |
|
From 20x3 Sales |
|
|
124,000 |
REQUIRED: Compute for the following:
|
1. Adjusted deferred gross profit balance in 20x1 |
|
|
2. Realized gross profit in 20x1 |
|
|
3. Adjusted deferred gross profit balance in 20x2 |
|
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