loss on repossession

appraised value before reconditioning cost 1,132,272.00

unrecovered cost
installment accounts receivable-unpaid 979,200.00 (3510000*20%=702000-35
deferred gross profit 156,672.00 (1,135,872.00)
Loss on repossession (3,600.00)

trade in allowance 288,000.00

market value beofre reconditioning cost 63,000.00
current value 54,000.00
reconditioning cost 9,600.00 (126,600.00)
normal profit 161,400.00

Estimated resale value repossessed 253,200.00

(3510000*20%=702000-35100000=2448000*40%)
Problem 1
1760000/8000000
Collections Gross Profit Rate Cost Rate
2015 8,000,000.00 0.22 0.88
2016 4,800,000.00 0.22 0.88
2017 3,200,000.00 0.22 0.88
Total 16,000,000.00

Problem 1
2015 2016 2017
Installmen 16,000,000.00 19,200,000.00
12,480,000.00 14,592,000.00
gross profi 3,520,000.00 4,608,000.00
GP Rate 22% 24% 25%
Collections
2015 Sales 8,000,000.00 4,800,000.00 3,200,000.00
2016 Sales 9,600,000.00 5,760,000.00
2017 Sales 14,400,000.00
RGP 1,760,000.00 3,360,000.00 5,686,400.00

Cost of Sale in 2016

2015
RGP 1,760,000.00
Divide: 2015 sales 8,000,000.00
GP rate 0.22

2016
RGP
2015 sales 4,800,000.00
GP rate 0.22
total 1,056,000.00

2017 collections 2015 3,200,000.00

GP rate 0.22
RGP 2015 704,000.00
RGP 2017 5,686,400.00

profits in 2015 & 2016 (4,304,000.00)

1,382,400.00
Collection*GP% collection*Cost Rate
Realized Gross Profit on Instalment Sales Recovered Cost
1,760,000.00 7,040,000.00
1,056,000.00 4,224,000.00
704,000.00 2,816,000.00
3,520,000.00 14,080,000.00

installment sales 16,000,000.00 Installment sales

Multiply 0.22 GP
GP 3,520,000.00 Cost of Sales

Realized Gross Profit Total RGP

2016 sales 9,600,000.00
GP Rate 2016 0.24
2,304,000.00 3,360,000.00

collections 2017 14,400,000.00

GP rate 0.25
RGP 2017 3,600,000.00 4,304,000.00
RGP 2016 1,382,400.00
collections 2016 5,760,000.00
GP rate 2016 0.24
16,000,000.00
(3,520,000.00)
12,480,000.00
Problem 3

trade in allowance
market value before reconditioning cost 240,000.00
estimated resale price after reconditioning (45,000.00)
reconditioning cost
cost to sell
normal profit
under allowance

trade in allowance 195,000.00

cash 510,000.00
installment accounts receivable 1,030,000.00
under allowance on trade in merchandise
installment sales

Trade in merchandise 45,000.00

cash
 160,000.00 trade in merchandise 195,000.00
down payment 510,000.00
installment collection 158,400.00
total collections 863,400.00
GPR 0.25
(195,000.00) RGP 215,850.00
(35,000.00)

installment sales 1,700,000.00

under allowance 35,000.00
adjusted installmet sales 1,735,000.00
cost of installment sales 1,301,250.00
35,000.00 gross profit 433,750.00
1,700,000.00 gross profit rate 0.25

installment accounts receivable 871,600.00

45,000.00 GPR 0.25
Deferred Gross Profit 217,900.00
Problem 4

Trade Allowance 10,000.00

market value
Estimated Resale Price After Reconditioning 12,000.00
Reconditioning Cost
Cost to Sell
Normal Profit (12,000.00)
Under allowance (2,000.00)

Trade-in merchandise 12,000.00

cash 20,000.00
Installment Accounts Receivable 60,000.00
Discount 10,000.00
under allowance on trade-in merchandise 2,000.00
installment Sales 100,000.00

RGP 28,133.33
Gain on repossession 15,929.41
Total RGP 44,062.74
Operating Expense (5,380.00)
Net Income 38,682.74
installment sales 100,000.00
under-allowance 2,000.00
adjusted installment sales 102,000.00
cost of installment sales (59,800.00)
Gross profit 42,200.00
GPR 0.41

Trade-in Merchandise 12,000.00

down payment 20,000.00
installment collections 36,000.00
total collections 68,000.00
GPR 0.41
RGP 28,133.33

Appraised Value before reconditioning

Unrecovered losses
installment accounts receivable60000[60000/10x6] 24,000.00
Deferred Gross profit (24000x.44) (9,929.41)
30,000.00

(14,070.59)
15,929.41
5D
6C