Hull Gan Co. uses Installment Method. On Jan. 1, 2023, Hull Gan Co.

's
records show the following balances

Installment Receivable - 2021 ₱ 480,000.00

Installment Receivable - 2022 ₱ 960,000.00
Deferred Gross Profit- 2021 ₱ 120,000.00
Deferred Gross Profit- 2022 ₱ 250,000.00

On December 31, 2023, Hull Gan Co.'s records show the following:
Installment Receivable - 2021 ₱ 360,000.00
Installment Receivable - 2022 ₱ 580,000.00
Installment Receivable - 2023 ₱ 1,200,000.00
Deferred Gross Profit- 2021 (before adjustment) ₱ 120,000.00
Deferred Gross Profit- 2022 (before adjustment) ₱ 250,000.00
Deferred Gross Profit- 2023 (before adjustment) ₱ 750,000.00

Installment sales in 2023 were made at 33 1/3% above cost.

Requirement:

Compute for the Installment Sale in 2023

Compute for the cash collections in 2023
Compute for the total realized gross profit in 2023
 Deferred Gross Profit ₱ 750,000.00
Gross Profit rate based on sale(.3333/1.3333) 25%
Requirement A: Installment sale in 2023 ₱ 3,000,000.00

Installment receivable - 2021 Jan 1 2023 ₱ 480,000.00

Less: Installment receivable - 2021 Dec 1 2023 ₱ 360,000.00
Cash Collection in 2023 ₱ 120,000.00
Installment receivable - 2022 Jan 1 2023 ₱ 960,000.00
Less: Installment receivable - 2022 Dec 1 2023 ₱ 580,000.00
Cash Collection in 2023 ₱ 380,000.00
Installment receivable - 2023 Jan 1 2023 ₱ 3,000,000.00
Less: Installment receivable - 2023 Dec 1 2023 ₱ 1,200,000.00
Cash Collection in 2023 ₱ 1,800,000.00
Requirement B: Total Cash Collection in 2023 ₱ 2,300,000.00

2021
Deferred gross profit Jan 1 2023 ₱ 120,000.00
Divide Installment Receivable Jan 1 2023 ₱ 480,000.00
Gross Profit Rate Based on Sale 25.00%

Collection in 2023 from :

2021 sale (120,000*25%) ₱ 30,000.00
2022 sale (380,000*26.04%) ₱ 98,958.33
2023 sale (1,800,000*25%) ₱ 450,000.00
Requirement C: Total realized Gross Profit in 2023 ₱ 578,958.33
 2022
₱ 250,000.00
₱ 960,000.00
26.04%
Hull Gan Co. uses Installment Method. On Dec. 31, 2022, Hull Gan Co.'s
records show the following balances

Installment Receivable - 2021 ₱ 480,000.00

Installment Receivable - 2022 ₱ 960,000.00
Deferred Gross Profit- (Before Year End Adjustment) ₱ 560,000.00

Gross Profit Rate in 2021 is 24% based on sales, while gross profit rate in
2022 is 33 1/3% based on cost

Requirement:

Compute for the total realized gross profit in 2022

 Deferred Gross Profit (Before adjustment)
Less:Deferred Gross Profit (After adjustment)
Installment receivable - 2021 xGPR (480,000*24%) ₱ 115,200.00
Installment receivable - 2022 xGPR (960,000*25%) ₱ 240,000.00
Requirement A: Decrease in Deferred Gross Profit realized gross profit in 2023
₱ 560,000.00

₱ 355,200.00
₱ 204,800.00
Hull Gan Co.'s records show the following balances

2021
Deferred Gross Profit- (Adjusted Ending Balances)
2021 Sales ₱ 200,000.00
2022 Sales

Gross Profit Rates Based on Sales 25%

Cash Collections:
2021 Sales ₱ 1,200,000.00
2022 Sales

Requirement:

Compute for the Balances of Installment Receivables on Dec 31, 2022

Compute for the Installment Sales in 2021 and 2022
 Deferred Gross Profit 2021 sale, Dec 31,2022
Divided By: Gross Profit Rate in 2021
2022 Requirement A: Installment receivable - 2021 Dec 31 2022
Add Back: Collections 2021( 1,200,000+480,000)
₱ 135,000.00 Requirement B: Installment sale-2021
₱ 335,000.00
Deferred Gross Profit 2022 sale, Dec 31,2022
20% Divided By: Gross Profit Rate in 2022
Requirement A: Installment receivable - 2022 Dec 31 2022
Add Back: Collections 2022
₱ 480,000.00 Requirement B: Installment sale-2022
₱ 1,550,000.00
₱ 135,000.00
25%
₱ 540,000.00
₱ 1,680,000.00
₱ 2,220,000.00

₱ 335,000.00
20%
₱ 1,675,000.00
₱ 1,550,000.00
₱ 3,225,000.00
Information on Vina Wee Co.'s Installment Sales is as follows:

2021
Sales 150,000.00
Cost of Sales 120,000.00
Gross Profit Rate 20%
Installment Receivable - 2021 90,000.00
Installment Receivable - 2022

During 2022, Vina Wee Co. repossessed a property that was sold
in 2021 for Php30,000.00. Prior to repossession, Php8,000.00 were
collected from the buyer. The repossessed property is expected to be
resold for Php20,000.00 after reconditioning cost of Php2,500.00.
The normal profit margin is 21%.

Requirements:
Compute for the gain / loss on repossession
Compute for the total realized gross profit in 2022
Compute for the profit recognized in 2022
 Requirement A: Estimated resale price ₱ 20,000.00
Reconditioning cost -₱ 2,500.00
2022 Normal Profit Margin (20,000*21%) -₱ 4,200.00
225,000.00 FV Repossessed Property ₱ 13,300.00
175,000.00
22%
40,000.00 Inventory ₱ 13,300.00
150,000.00 Deferred Gross Profit(22,000*20%) ₱ 4,400.00
Loss on repossession ₱ 4,300.00
Installment receivable

Installment receivable 2021

Beg 90,000.00 22,000.00
28,000.00
40,000.00
Installment receivable 2022
Beg - -
225,000.00 75,000.00
150,000.00
Realized Gross Profit From:
2022 sale (28,000*20%) ₱ 5,600.00
2021 sale (75,000*22%) ₱ 16,500.00
Requirement B: Total realized gross profit in 2022 ₱ 22,100.00
Loss on repossession -₱ 4,300.00
Requirement C: Profit in 2022 ₱ 17,800.00
₱ 22,000.00

write Off
Collection
End

write Off
Collection
End
Vina Wee Co. uses the installment sales method. On Jan 1, 2020,
Vina Wee Co. sold inventory costing Php150,000.00 for Php200,000.00
payable as follows: down payment of Php50,000.00 and twelve
monthly payments of Php12,910.00 due at the beginning of each
succeeding month. After making four succeeding monthly payments,
the customer defaulted and Vina Wee Co. repossessed the inventory.
The fair value of the repossessed inventory is Php95,000.00
The installment includes interest of 1/2 of 1%.

Requirements:
Realized Gross Profit from the Sale
Gain or loss on repossession
Requirement A:
DATE: Collection Interest Income
1/1/2020
1/1/2020 ₱ 50,000.00
2/1/2020 ₱ 12,910.00 ₱ 750.00
3/1/2020 ₱ 12,910.00 ₱ 689.20
4/1/2020 ₱ 12,910.00 ₱ 628.10
5/1/2020 ₱ 12,910.00 ₱ 566.69
Collection Pertaining to Principal

Requirement B: Inventory ₱ 150,000.00

Deferred Gross Profit ₱ 25,248.50
installment receivable ₱ 100,993.98
Gain on repossession squeeze ₱ 74,254.52
 Principal Balance
₱ 200,000.00
₱ 50,000.00 ₱ 150,000.00
₱ 12,160.00 ₱ 137,840.00
₱ 12,220.80 ₱ 125,619.20
₱ 12,281.90 ₱ 113,337.30
₱ 12,343.31 ₱ 100,993.98
₱ 99,006.02