Professional Documents
Culture Documents
III
V
Growth Sales Corporation sells on instalment basis and accounts for it using the
instalment method. Some information related to its operations are summarized
below
2009
P370,500
Cost of Sales
Gross Profit on sales
35%
2010
P855,36
0
34%
2011
P568,890
37%
January 1, 2011
P72,060
1,033,380
P208,320
327,270
During 2011, the company repossessed an inventory which had been sold in 2010
for P16,200 and P9,600 had been collected prior to default. GROWTH values the
repossessed goods at market value.
The resale price of the repossessed
merchandise amounted to P5,100 after incurring reconditioning cost of P1,000.
Compute for the total realized profit for the year 2011.
a. P511,010
b. 516,518
c. 518,762
d. 513,254
VI
The following data pertain to instalment sales of INNOVATEs store: Down payment
is 30%: Cost of instalment sales: 2009, P2,725,000; 2010, P3,925,000; 2011,
P4,840,000. Mark up on cost is 40%. Collections after down payment are: 45%
during the year of sale; 35% during the year after sale; 20% on the third year. What
is the amount of gross profit at December 31, 2010 to be presented in the
Statement of Financial Position?
a. P757,050
b. P659,400
c. P431,750
d. P604,450
VII
The following selected accounts appeared in the trial balance of Changes Company
as of December 31, 2011.
Installment receivable 2010
sales
Installment receivable 2011
sales
Inventory December 31,
2010
Purchases
Freight-in
Additional information:
P360,000
Loss on repossession
480,000
Installment Sales
168,000
Regular sales
1,307,000
25,000
Selling
Expenses
&
3,960
1,020,000
924,000
Adm.
276,000
b. P317,640
c. P308,140
d. P321,600
VIII
Atlantic Company, which began operations on January 1, 2012 appropriately uses
the instalment method of accounting. The following data pertain to Atlantics
operations for year 2012:
Installment sales (before adjustment)
P 3,150,000
Operating expenses (before write-off and repossessions)
252,000
Regular sales
1,312,500
Cash collections on instalment sales (including interest of P84,000)
1,092,000
Cost of regular sales
752,500
Cost of instalment sales
2,205,000
Installment receivables written-off due to defaults
154,000
FMV of repossessed merchandise
189,000
Repossessed accounts
350,000
Actual value of trade-in Merchandise
280,000
Trade-in allowance
490,000
How much is the deferred gross profit at December 31, 2012? What is the net
income for the year ended December 31, 2012?
A. P353,500 ; P455,000
C. P287,000 ; P441,000
B. P353,500 ; P640,500
D. P287,000 ; P525,000
IX
The following data were taken from the records of Excel Company, before the
accounts are closed for the fiscal year ended March 31, 2012. The company sells
exclusively on instalment basis and uses instalment method of recognizing revenue.
For the year ended For the year ended For the year ended
March 31, 2010
March 31, 2011
March
31, 2012
Installment Sales
Costs of Goods Sold
682,500
Salaries Expense
Rent Expense
10,500
Balances as of
March 31, 2012
Installment AR, 2010
52,500
Installment AR, 2011
245.000
Installment AR, 2012
857,500
Deferred Gross Profit, 2010
52,500
Deferred Gross Profit, 2011
263,200
Deferred Gross Profit, 2012
367,500
P700,000
525,000
P875,000
525,000
21,000
10,500
22,750
10,500
109,375
P1,050,000
52,500
266,000
24,500
2012
1,782,000
2,068,000
3,618,000
1,200,000
1,000,000
1,650,000
1,900,000
1,800,000
100,000
90,000
-03,410,000
1.
What is the net income for the year 2012 using the percentage of completion
method.
2. What is the balance of the Construction in Progress, net of Contract Billings
account at YKs December 31, 2012 balance sheet? (Using the Percentage of
Completion Method)
3. What is the balance of the Construction in Progress, net of Contract Billings
account at YKs December 31, 2012 balance sheet? (Using Zero-Profit
Method)
4. What is the amount of gross profit to be recognized for the year ended 2013?
(Using Percentage of Completion Method)
II
The XY Corporation began construction work under a three-year contract. The
contract price was P700,000. XY uses the percentage of completion method for
financial accounting purposes. The financial statement presentation relating to this
contract at December 31, 2011 is presented below:
Balance Sheet
Accounts Receivable contract billings
Construction in progress
P87,500
Less: Contract billings
82,250
P26,250
5,250
Income statement
Income (before tax) on the contract recognized in 2011 P17,500
2011
P85,000
92,000
100,000
100,000
2012
P155,000
280,000
350,000
250,000
Compute for the profit recognized in 2012 and percentage of completion as of year
2012.
A. P33,000; 32%
B. P125,000; 80%
C. P70,000; 25% D. P0-; 100%
IV
On July 1, 2011, BC Construction Corp., contracted to build an office building for FG,
Inc. for a total contract price of P2,437,500.
2011
2013
Contract cost incurred to date
2,625,000
Estimated costs to complete the contract
Billings to FG, Inc.
2012
187,500
1,500,000
1,687,500 1,000,000
-0375,000 1,375,000
687,500
How much is the Construction in progress account balance at December 31, 2012
using percentage of completion method?
How much is the Construction in progress account net of progress billings at
December 31, 2012, using the zero-profit method?
How much is the realized gross profit/(loss), using the percentage of completion
method in 2013?
V
TMJ Builders, Inc. entered in a construction contract on April 1, 2008 and uses the
percentage of completion method of accounting for it. The total contract price is
P10,000,000. TMJ received a down payment of P1,000,000 and a 5% interest
bearing note for the remaining balance. The client paid 60% of the balance plus
interest in December 31, 2008 and the rest in December 31, 2009. Estimated cost
at completion are P7,500,000 for 2008 and P8,000,000 for 2009.
How much income should TMJ recognize in this contract for the year ended
December 31, 2009?
VI
Complex Builders Construction Company entered into two construction jobs which
both commenced in 2011 (in thousands).
Project 1
Project 2
Construction Revenue
Construction cost incurred
Estimated future cost
General and administrative exp.
P10,500
6,000
3,000
500
Billing to clients
P7,140
7,000
1,560
250
6,300
Collections
5,600
6,000
5,000
Based on the information given, how much gross profit (loss) would Complex
Builders report on its 2011 income statement?
With Dependable Estimates
Without Dependable Estimates
A. (420,000)
(1,420,000)
B. 1,000,000
(1,420,000)
C. (420,000)
1,000,000
D. (1,420,000)
(420,000)
VII
On July 1, 2011, Face-off Company contracted to construct a factory building for
Destiny for a total contract price of P2,688,000. The building was completed by
December 1, 2013. The company uses the input measures cost to cost method.
2011
2012
2013
Contract cost incurred
P1,024,000
P832,000
P464,000
Estimated costs to complete the contract
1,024,000
464,000
Billings to Destiny
1,024,000
1,120,000
544,000
What is the amount of profit (loss) to be recognized for the year ended December
31, 2012? Excess of Construction in Progress over Progress Billings / Progress
Billings over Construction in Progress in 2011.
A. P294,000 ; P320,000 due to
asset
B. P(25,600) ; P320,000 current liability