Answered: The balance of the unrealized gross…

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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Question

Pay Later Co. started operations on January 1, 2010, selling home appliances on the installment basis. For 2010 and 2011, the following information is available:

2010 2011

Installment sales P1,200,000 P1,500,000

Costs of installment sales 720,000 1,050,000

Collections on 2010 sales 630,000 450,000

Collections on 2011 sales - 900,000

On January 6, 2011, an installment sale account balance of 2010 was defaulted and the merchandise, with current market value of P15,000, was repossessed. The account balance was P24,000.

The balance of the unrealized gross profit account as at the end of 2011 was:

a. P214,800

b. P228,000

c. P218,400

d. P450,000

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