Problem 1. The following selected accounts were taken from the trial balance of Survival Company as of
December 31, 2013:
The entry for repossessed goods was:
RM
RL
150,000
240,000
IR-2011
IR-2012
180,000
210,000
RM
DGP 2011
DGP 2012
RL
150,000
54,000
67,200
118,800
IR-2011
IR-2012
180,000
210,000
525,000
Purchases
3,900,000
Freight in
30,000
2011
Beg ISAR
1,230,000
Rep. Accounts
(180,000)
(210,000)
(410,000)
150,000
(570,000)
450,000
(1,760,000)
2,700,000
30%
32%
37.5%
45,000
144,000
1,012,500
150,000
4,605,000
Collections
End. ISAR
Less: Shipment on IS
2,787,500
GP rate
1,817,500
DGP
282,000
1,535,500
Cash sales
1,201,500
900,000
Charge sales
Total sales
1,800,000
2,700,000
Less: COS
1,535,500
GP on regular sales
RGP 11 (410,000 x 30%)
RGP 12 (570,000 x 32%)
RGP 13 (1,760,000 x 37.5%)
Total RGP
OPEX
Repossesssion Loss
Net Icome
1,164,500
123,000
182,400
660,000
2,129,900
(150,000)
(118,800)
1,861,100
2013
740,000
Repossessed Merchandise
TGAS
2012
4,460,000
RM
DGP
Loss
189,000
89,500
73,500
ISAR
350,000
(290,000 x 85%) 57,500 = 189k
How much is the deferred gross profit at December 31, 2013? What is the net income for the year ended
December 31, 2013?
P2
IS net of over allowance
2,940,000
GP on RS (1,312,500 - 752,500)
RGP (1,288,000 x 25%)
560,000
322,000
Less: Cost of IS
2,205,000
TRGP
882,000
GP
735,000
GP rate
25%
Interest income
84,000
(367,500)
(73,500)
Net income
Total collections
Less: RS
525,000
2,088,000
1,312,500
Answer
800,000
1,288,000
2,940,000
(1,288,000)
(154,000)
(350,000)
1,148,000
25%
287,000
Problem 3. The following account balances appear on the books of Fulfillment Company
Merchandise repossessed was erroneously debited as a newly acquired merchandise equal to the
amount defaulted by the customer.
Appraisal reports show that this repossessed merchandise has a true worth of P20,000 at the time of
repossession and remain unsold at year end.
RM
20,000
DGP 27,500
DGP 27,500
RM 20,000
Loss
2.500
Loss 2,500
ISAR
50,000
Purchases 50,000
The final inventory of the merchandise (new) valued at cost amounted to P45,000.
P3
Beg. Inv
Purchases (640 - 50)
Rep. Merch.
TGAS
Ship. On IS (1M x 50%)
TGAS on RS
Less: End. Inv.
Cost of Reg. Sales
75,000
590,000
20,000
685,000
(500,000)
185,000
65,000
120,000
250,000
CORS
120,000
GP
RGP 2011
130,000
261,250
165,000
200,000
756,250
Opex
Loss on rep.
(425,000)
(2,500)
Net Income
328,750
Problem 4. Confidence Corporation sells goods on the installment basis. How much was the collections for the
year?
P4
Rep. Accounts
Rep. Merch
2,700,000
(1,687,500)
Loss on Rep.
(202,500)
DGP
810,000
GPR (810/2,700)
30%
DGP or IS
3,600,000
12,000,000
(810,000)
(2,700,000)
RGP / Collections
(1,170,000)
(3,900,000)
1,620,000
5,400,000
DGP on Rep/ AR
ANSWER