Professional Documents
Culture Documents
2. a.
Estimated CV of free assets 160,000
Less: Preferred claims 16,000
Total amount available to unsecured 144,000
creditors
b.
Estimated CV of free assets 160,00
0
Less: Preferred claims 16,000
Total amount available to unsecured creditors 144,00
0
Divide: Total unsecured claims 180,00
(155,000+25,000) 0
Estimated liquidating dividend per peso claim 0.80
c.
Net free assets 144,000
Less: Total unsecured liabilities 180,000
Deficiency to creditors (36,000)
3.
5.
Total free assets 700,000
Less: Unsecured claims with priority:
Accrued Salaries 15,000
Unpaid income taxes 35,000 50,000
Net free assets 650,000
Divide: Total unsecured claims without priority:
Total unsecured claims of all classes
(with or without priority) 1,050,0
00
Less: Unsecured claims with priority 50,000 1,000,00
0
% of recovery 65%
INSTALLMENT SALES
1.
2015 2016
Sales 900,000 600,000
Collections (300,000) (200,000)
(100,000)
Write-offs (50,000) (50,000)
(150,000)
Installment A/R 12/31/15 550,000 100,000
Multiply: Gross profit % 40% 30%
Deferred gross profit 220,000 30,000
2. a.
Down payment (20% x 545,000) 109,000
Installments (545,000 x 80% x 40%) 174,400
Total collections in year 1 283,400
Mutiply: Gross profit rate 35/135
Realized gross profit year 1 73,474
b.
Installment sales year 2 785,00
0
Less: Down payment (20%) 157,00
0
Balance 628,00
0
Less: Collections year of sale
(40% x 628,000) 251,20
0
Receivable bal. -year 2 at the end year 2 376,80
0
Mutiply: Gross profit rate 335/13
5
Unrealized gross profit year 2 97,689
c.
YEAR 2 YEAR 3
Installment Sales 785,000 968,000
Down payment (157,00 (193,60
0) 0)
Balance 628,000 774,400
Collections:
Year of sale (40%) (251,20 (309,76
0) 0)
Year after sale (35%) (219,80 -
0)
Installment A/R, end of year 157,000 464,640
3
d.
Installment A/R, end of year 3 621,6
40
Multiply: Gross profit rate on sales 35/13
5
Unrealized gross profit, end of year 161,1
3 66
3. a.
Installment receivable, 2014 sales 120,000
12/31/2014
Installment receivable, 2014 sales (15,000)
12/31/2015
Total credits 105,000
Defaulted contracts (7,750)
Collections, 2015 97,250
Multiply: Gross profit on sales 45%
(54,000/120,000)
Gross profit realized on collections, 2014 43,762.5
sales 0
b.
Installment sales, 2015 425,000
Less: Cost of installment sales:
Inventory, 12/31/2014 70,000
Purchases 555,00
0
Repossessed merchandise 3,000
Total goods for sale 628,00
0
Less: Inventory of new and repossessed
merchandise, 12/31/2015 95,000
Total cost of goods sold 533,00
0
Less: Cost of goods sold, regular sales
(385,000 x 70%) 269,50 263,500
0
Gross profit on installment sales 161,500
c.
Value of repossessed merchandise 3,000.00
Less: Unrecovered cost (7,750 x 55%) 4,262.50
Loss on repossession 1,262.50
4. a.
Lot A Lot B Lot C and house
Sales Price 171,428 240,000 420,000
Acquisition cost 160,000 240,000
Allocated cost (40,000) (60,000) 100,000
Cost of house 152,000
Total 120,000 180,000 252,000
Gross profit 51,428 60,000 168,000
Gross profit rate 30% 25% 40%
Lot A:
Collections Interest Principal Balance
Sales Price 171,428.00
Down payment 51,428.00 - 51,428.00 120,000.00
June 30 12,000.00 3,000.00 9,000.00 111,000.00
September 30 12,000.00 2,775.00 9,225.00 101,775.00
December 31 12,000.00 2,544.38 9,455.62 92319.38
Total 8,319.38 79,108.62
Lot B:
Collections Interest Principal Balance
Sales Price 240,000.00
Down payment 80,000.00 - 80,000.00 160,000.00
December 31 20,000.00 2,666.67 17,333.33 142,666.67
Total 2,666.67 97,333.33
Lot C:
Collections Interest Principal Balance
Sales Price 420,000.00
Down payment 180,000.00 180,000.00 240,000.00
December 31 40,000.00 12,000.00 28,000.00 212,000.00
Total 12,000.00 208,000.00
5.
Cash basis (250,000 x 25/125) 50,000
Charge basis (400,000 x 33 1/3 / 133 100,000
1/3)
Installment basis (240,000 x 50/150 80,000
Total realized gross profit 230,000
CONSTRUCTION CONTRACTS
1.
2014 2015
Contract price 1,100,000 1,100,000
Less total estimated cost
(390,000 + 260,000) 650,000
(390,000 + 280,000) 670,000
Gross profit 450,000 430,000
Multiply by percentage of
completion
[390,000/(390,000 + 260,000)] 60%
100%
Realized revenue to date 270,000 430,000
Less realized revenue in prior - 270,000
year(s)
Realized revenue in current year 270,000 160,000
2.
Initially agreed fixed contract 800,000
Variation in the contract 100,000
Penalty (30,000)
Total contract revenue 870,000
3. a.
Contract price P
1,200,000
Less total estimated cost (590,000 + 1,000,000
410,000)
Estimated gross profit 200,000
Multiply by percentage of completion
(590,000/ 1,000,000) 59%
Realized gross profit for 2014 P 118,000
A turn-key contract is a type of construction contract where by the construction firm will
provide not only the professional services but also the manpower and the materials
needed. When completed the project will be turned over to the customer, hence the term
turn key.
b.
Cost incurred to date P 590,000
Profit recognized on project in progress (a) 118,000
Balance of construction in progress, Dec.31 P 708,000
2014
4. a.
Cost incurred Estimated Cost to Total Estimated
Complete Cost
Original Contract 16,000,000 50,050,000 66,050,000
Change No. 1 100,000 100,000 200,000
Change No. 2 - 100,000 100,000
Change No. 3 600,000 600,000 1,200,000
Change No. 4 250,000 - 250,000
Total 16,950,000 50,850,000 67,800,000
b.
Total contract price
(80,000,000 + 250,000 + 1,200,000 + 81,650,00
200,000) 0
Multiply by percentage of completion 25%
Estimated gross profit 20,412,50
0
Less cost actually incurred in 2014 (a) 16,950,00
0
Gross profit to be recognized in 2014 3,462,500
b) Journal Entries:
Jan. 2:. .Cash. ........................................................ 1,500,000
Notes receivable..........................................3,000,000
Deferred revenue from FF (adjusted SV)... 2,700,000
Revenue from FF (Market value of equipment) 1,800,000
2.
Acquisition cost 50,000
Less franchise amortization (50,000/10) 5,000
Franchise - December 31,2014 45,000
3.
Down payment 18,000
Present value of annual payments 58,315
Total franchise fee 76,315
Less: Loss on sale of equipment
(20,000 16,000) 4,000
Net revenue from franchise fee 72,315
4.
Deferred Revenue from franchise fee:
Downpayment P6,000,000
Present value of the note (P1,000,000 X 2.91) 2,910,0008,910,000
Less: Cost of franchise fee _2,000,000
Deferred gross profit P6,910,000
5.
Down payment (3,125,000 x 40%) P1,250,000
Present value of notes receivable ( 1,875,000/4) 468,750 x 3.04
1,425,000
Adjusted sales value of initial franchise fee 2,675,000
Direct cost of service s 802,500
Gross profit 1,872,500
Gross profit rate (1,872,500 2,675,000) 70%
Date Collection Interest Principal Balance of PV of NR
1/1 P1,425,000
6/30 468,750 171,000 297,750 1,127,250
12/30 468,750 135,270 333,480 793,770
Total collection applying to principal 631,230
Down payment 1,250,000
Total collection 1,881,230
Gross profit rate 70%
Realized gross profit on
initial franchise fee 1,316,861