On November 1, 20x1, Auto Motors, which maintains a perpetual inventory records sold a new automobile to Speed for P6,800,000. The cost of the car to the seller is P5,205,000. The buyer paid 30% down payment and received a P640,000 allowance on an old car traded, the balance being payable in equal monthly installments commencing the month of sale. The monthly amortization was P240,000 inclusive of 12% interest on the unpaid amount of the obligation. The car traded-in has a wholesale value of P960,000 after expending reconditioning cost of P180,000. After paying three (3) installments, the buyer defaulted, and the car was subsequently repossessed. When reacquired, the car was appraised to have a fair value of P2,400,000. REQUIRED: 5. Gross profit rate in 20x1 _____________ 6. Total collections in 20x1 _____________ 7. Realized gross profit on installment sales during 20x1
On November 1, 20x1, Auto Motors, which maintains a perpetual inventory records sold a new automobile to
Speed for P6,800,000. The cost of the car to the seller is P5,205,000. The buyer paid 30% down payment and
received a P640,000 allowance on an old car traded, the balance being payable in equal monthly installments
commencing the month of sale.
The monthly amortization was P240,000 inclusive of 12% interest on the unpaid amount of the obligation. The
car traded-in has a wholesale value of P960,000 after expending reconditioning cost of P180,000.
After paying three (3) installments, the buyer defaulted, and the car was subsequently repossessed. When
reacquired, the car was appraised to have a fair value of P2,400,000.
REQUIRED:
5. Gross profit rate in 20x1 _____________
6. Total collections in 20x1 _____________
7. Realized gross profit on installment sales during 20x1
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