The Famcor Sales Company employs the perpetual inventory basis in the accounting for new cars. On August 15,2012, a new car costing $165,000 and with a list price of $220,000 was sold to Rose Castro. The company granted Ms. Castro an allowance of $85,000 on the trade-in of her old car, the current value if which was estimated to be $81,700; the balance of $135,000 was payable as follows: $35,000 cash at the time of purchase and twenty monthly payments of $5,000 starting September 1, 2012. On April 1,2013, Ms. Castro defaulted in the payment of the March 1,2013, installment. The new car sold was repossessed, and its value to the seller was $40,000. Required : calculate the total realized gross profit and the gain (loss) on repossession on December 31,2013 .
The Famcor Sales Company employs the perpetual inventory basis in the accounting for new cars. On August 15,2012, a new car costing $165,000 and with a list price of $220,000 was sold to Rose Castro. The company granted Ms. Castro an allowance of $85,000 on the trade-in of her old car, the current value if which was estimated to be $81,700; the balance of $135,000 was payable as follows: $35,000 cash at the time of purchase and twenty monthly payments of $5,000 starting September 1, 2012. On April 1,2013, Ms. Castro defaulted in the payment of the March 1,2013, installment. The new car sold was repossessed, and its value to the seller was $40,000. Required : calculate the total realized gross profit and the gain (loss) on repossession on December 31,2013 .
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The Famcor Sales Company employs the perpetual inventory basis in the
accounting for new cars. On August 15,2012, a new car costing $165,000 and
with a list price of $220,000 was sold to Rose Castro. The company granted Ms.
Castro an allowance of $85,000 on the trade-in of her old car, the current value
if which was estimated to be $81,700; the balance of $135,000 was payable as
follows: $35,000 cash at the time of purchase and twenty monthly payments of
$5,000 starting September 1, 2012. On April 1,2013, Ms. Castro defaulted in
the payment of the March 1,2013, installment. The new car sold was
repossessed, and its value to the seller was $40,000.
Required : calculate the total realized gross profit and the gain (loss) on
repossession on December 31,2013 .
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