Nissan Company sells new automobiles and records revenues based on the present value of the consideration. A new Escapade costing P700,000 was sold on October 1, 2019 for P1,218,000; a 2014 Toyota Revo was accepted as down payment and an allowance of P300,000 was accepted on the agreed trade in. The balance was payable in 36 equal monthly instalments of P25,500 starting Nov. 1, 2018. Nissan Company anticipates selling price on reconditioned Toyota Revo of P350,000 after reconditioning it for P50,000 cost. Selling costs equal to 5% of selling price is also anticipated. The gross profit for reconditioned automobiles is expected to be 20%. The market rate of interest is 12%. (round off PV factor to 2 decimal places). Required: How much is the gross profit on the sale of the Nissan Escapade?
Nissan Company sells new automobiles and records revenues based on the present value of the consideration. A new Escapade costing P700,000 was sold on October 1, 2019 for P1,218,000; a 2014 Toyota Revo was accepted as down payment and an allowance of P300,000 was accepted on the agreed trade in. The balance was payable in 36 equal monthly instalments of P25,500 starting Nov. 1, 2018. Nissan Company anticipates selling price on reconditioned Toyota Revo of P350,000 after reconditioning it for P50,000 cost. Selling costs equal to 5% of selling price is also anticipated. The gross profit for reconditioned automobiles is expected to be 20%. The market rate of interest is 12%. (round off PV factor to 2 decimal places).
Required: How much is the gross profit on the sale of the Nissan Escapade?
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