On January 1, 2008, Rex Co. sold a used machine to Lake, Inc. for P525,000. On this date, the machine had a depreciated cost of P367,500. Lake paid P75,000 cash on January 1, 2008 and signed a P450,000 note bearing interest at 10%. The note was payable in three annual installments of P150,000 beginning January 1, 2009. Rex appropriately accounted for the sale under the installment method. Lake made a timely payment of first installment on January 1, 2009 of P195,000, which included interest of P45,000 to date of payment. At December 31, 2009, Rex had deferred gross profit of

On January 1, 2008, Rex Co. sold a used machine to Lake, Inc. for P525,000. On this date, the machine had a depreciated cost of P367,500. Lake paid P75,000 cash on January 1, 2008 and signed a P450,000 note bearing interest at 10%. The note was payable in three annual installments of P150,000 beginning January 1, 2009. Rex appropriately accounted for the sale under the installment method. Lake made a timely payment of first installment on January 1, 2009 of P195,000, which included interest of P45,000 to date of payment. At December 31, 2009, Rex had deferred gross profit of

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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5
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am.108.
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