WRAP-UP EXERCISE No.

2
Installment Sales
Problem 1

1. RGP, 2015
2. DGP End, 2015
3. RGP, 2016
4. DGP End, 2016
5. Net Income, 2015
6. Net Income, 2016

On January 1, 2015, DASH ONE Co. sold equipment to DASH TWO Co. on installment for 2M. Equal payments of 500,000 are to be made semi-annually
every June 30 and December 31. The carrying value of the equipment is 1,299,375. The market rate of interest is 12%. Expense for the year is 50,000.

Problem 2

1. Determine the equal semi-annual payments.

2. Determine the total realized gross profit in 2015. (installment method)
3. How much of the 2015 total collections apply to interest?

On January 1, 2015, DASH THREE Co. sold property carried in the inventory at a cost of 840,000 for 1.4M. A 10% down payment was made and the
balance payable in 4 equal installments inclusive of 6% interest, payable semi-annually every June 30 and December 31.

Problem 3

1. Prepare the adjusting entry on December 31, 2015.

2. Determine the adjusted or correct amounts of the ff:
A. Retained Earnings
B. GP Rate
C. RGP
D. DGP, end 2013-2015
E. Loss on repossession
F. Net Income
G. Gross Profit on Regular Sales
H. Total Assets
I. Total Liabilities
J. Total Shareholders Equity

A trial balance prepared for the CUTE Corp on December 31, 2015 is given below:

The Following account balances appeared in the post-closing trial balance

at the end of 2014:

Installment Accounts Receivable, 2014 480,000

Installment Accounts Receivable, 2013 200,000
DGP, 2014 192,000
DGP, 2013 45,000

At the end of December, before preparing the trial balance, the bookkeeper
made the following incomplete entry:

Problem 4
1. Determine the RGP to be recognized at December 31, 2015.

TAX Co. sold vehicles on Installment basis. On October 1, 2015, FSRM

model costing 748,200 was sold for 1,236,000. A 2008 ADVISORY model
was accepted as down payment with a trade in value of 300,000 and the
balance payable in 36 monthly installments due starting at the end of
October plus 10% interest on diminishing balance. The ADVISORY model
has an estimated selling price of 400,000 after reconditioning the same
for 50,000. The normal gross profit, to be considered in the fair value
computation, is 10%.

That in all things, God may be glorified.

LONG TERM CONSTRUCTION CONTRACTS
Problem 1

1. How much is the Due to/ from account in 2014?

2. How much is the revenue, cost and profit in 2014?
3. How much is the RGP in 2015?

On March 1, 2013, MALAYA Co. was contracted to construct a factory building for MASAYA Co. for a total contract price of 8,400,000. The building was
completed by October 31, 2015. See the table below for the additional information.

Problem 2

1. Determine the contract revenue, contract cost and gross profit from 2013-2015.
2. Determine the Due to/ from account in 2013-2014.
3. Journalize all entries from 2013-2015.

A construction contractor has a fixed contract price for 9M to build a building. The initial amount of revenue agreed in the contract is 9M. The
contractors initial estimate of contract costs is 8M. It will take three years to build the building.

By the end of year 2013, the contractors estimate of contract costs has increased to 8,050,000. By the end of 2014, the customer approves a variation
resulting in an increase in contract revenue of 300,000 and estimated additional contract cost of 470,000. At the end of 2014, cost incurred include
100,000 for standard materials stored at the site to be used in year 2015 to complete the project. The contractor determines the percentage of completion
by calculating the proportion that contract costs incurred for work performed to date to the estimated total contract costs.

A summary of financial data during the construction period is as follows:

Problem 3

1. What is the estimated total gross profit for this contract?

2. How much is the contract price of the project?

On January 3, 2015, a fire destroyed the office building of BLISSFUL CO and destroyed all the files in the accountants desk. The president of the
company contacted you to help reconstruct the contract information. The following data were taken from the salvage files:

Problem 4

1. How much is the realized gross profit in 2013?

2. How much is the excess of CIP over progress billings or progress billing over CIP in 2014?
3. How much is the RGP in 2013?

On July 1, 2013, GLEE Corp obtained a contract to construct a building. The building was estimated to be built at a total of 5,250,000 and is scheduled
for completion on October 2015. The contract contains a penalty clause to the effect that the other party was to deduct 17,500 from the contract price
each week of delay. Completion was delayed for 3 weeks. There was an increase in the amount of 200,000 per cost escalation clause. GLEE Corp uses the
percentage of completion method. Below are the data

That in all things, God may be glorified.

That in all things, God may be glorified.