INSTALLMENT SALES 1.
MM Com Compa pan ny bega began n oper operat aton onss on Jan Janua uary ry 1, 200 2007 7 and and appr approp opra ra!e !e"y "y use usess !#e !#e ns!a""men! me!#od o$ a%%ountng. T#e $o""o&ng da!a are a'a"ab"e $or 2007 and 200( 2007 Ins!a""me Ins!a""men! n! sa"es )))))))))))) ))))))))))))))))) )))))))))))) )))))))))))) )))))))))) ))))) Cas# %o""e%tons $rom 2007 2007 sa"e sa"ess )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) 200( sa"es sa"es )))))))))))) )))))))))))))))))) )))))))))))) )))))))))))) )))))))) )) ross pro/! on sa"es )))))))))))))))))))))))))))))
*1,200,000 *1,200,000
200( *1,+00,000 *1,+00,000
00, 00,00 000 0
+00, +00,00 000 0 -00,000 -00,000 0
0
T#e rea"ed gross pro/! $or 200( s a. b.
*20,000 30,000
%. d.
*0,000 -00,000 4AIC*A5
2.
TT Comp Compan any y, &#% &#%# # beg began an busn busness ess on Januar January y 1, 1, 200( 200(,, app appro ropr pra! a!e"y e"y uses uses !#e !#e ns!a""men! sa"es me!#od o$ a%%ountng. T#e $o""o&ng da!a are a'a"ab"e $or 200(6
Ins!a""men! a%%oun!s a%%oun!s re%e'ab"e, re%e'ab"e, 1210( ))))))))))))))))))))) 8e$erred gross pro/!, 1210( 4be$ore re%ognton o$ rea"ed rea"ed gross gross pro/!5 pro/!5 )))))))))))) )))))))))))))))))) )))))))))))) )))))))))))) )))))))))) )))) ross ross *ro/! *ro/! on sa"es sa"es ))))))) ))))))))))) )))))))) )))))))) )))))))) )))))))) )))))))) )))))))) )))))))) )))))))) ))))))) )))
*200,000 10,000 10,000 0
T#e %as# %o""e%tons and !#e rea"ed gross pro/! on ns!a""men! sa"es $or !#e year ended 8e%ember 1, 200( s#ou"d be
a. b. %. d. .
Cas# %o""e%tons *100,000 100,000 1+0,000 1+0,000
9ea"ed gross pro/! *(0,000 -0,000 (0,000 -0,000
4AIC*A5 8udong 8udong E"e%! E"e%!ro ron% n%ss ma: ma:es es a"" a"" o$ o$ !s !s sa"es sa"es on %re %red! d! and a%%ou a%%oun! n!ss $or $or !#em !#em usn usng g !#e !#e ns!a""men! ns!a""men! sa"es me!#od. ;or smp"%!y assume !#a! a"" sa"es o%%ur on !#e /rs! day o$ !#e year and !#a! a"" %as# %o""e%tons are made on !#e "as! day o$ !#e year. 8udong E"e%!ron%s %#arges 1( n!eres! on !#e unpad ns!a""men! ba"an%e. 8a!a $or 2007 and 200( are as $o""o&s6 2007 Sa"es )))))))))))) )))))))))))))))))) )))))))))))) )))))))))))) )))))))))))) )))))))))) )))) *100,000 *100,000 Cos Cos! o$ goods oods so"d so"d )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) -0,0 -0,000 00 Cas# %o""e%tons 4prn%pa" and n!eres!5
200( *120,000 *120,000 (0,0 (0,000 00
2007 sa"es )))))))))))))))))))))))))))))))))) 200( sa"es
0,000
+0,000 30,000 4Adap!ed5
T#e n!eres! n%ome re%ogned n 200( amoun!ed !o6 a. b. .
%. d.
*+,-0 3,700
+.
*1,00 21,-00
*1,( 22,(00
%. d.
*7,1( 3,-00
T#e T#e boo: boo:ss o$ =a =arr rry y Co, Co, s#o& s#o& !#e !#e $o" $o""o "o& &ng ng ba"a ba"an% n%es es on on 8e% 8e%em embe berr 1, 1, 200 200(6 (6 A%%oun! A%%oun!ss 9e%e'a 9e%e'ab"e b"e )))))))))))) ))))))))))))))))) )))))))))))) )))))))))))) )))))))))))) )))))))))) ))) *1,7+0 *1,7+0 8e$ 8e$err erred ros rosss *ro/ *ro/!! 4be$ 4be$or ore e ad>u ad>uss!men !men!5 !5 )))) )))))) )))) )))) )))) )))) )) (,0 (,000 00 Ana"yss o$ !#e a%%oun!s a%%oun!s re%e'ab"e re'ea" !#e $o""o&ng6 9egu"ar a%%oun!s a%%oun!s )))))))))))))))))))))))))))))))))))))))))))) *207,+00 2007 ns!a""men! ns!a""men! a%%oun!s a%%oun!s ))))))))))))))))))))))))))))))))) 1-,2+0 2007 ns!a""men! ns!a""men! a%%oun!s a%%oun!s ))))))))))))))))))))))))))))))))) 30,000 Sa"es on an ns!a""men! bass n 2007 &ere made a! 0 abo'e %os!? n 200(, a! 1 abo'e %os!. E@penses pad &as *1,+00 re"atng !o ns!a""men! sa"es. =o& mu%# s !#e ne! n%ome on ns!a""men! sa"es a. *11,000 %. *1-,000 b. 11,+00 d. 10,2+0 4*#"C*A5
-.
8J Co. Co. a%% a%%oun oun!s !s $or $or ns ns!a !a""me ""men! n! sa"e sa"ess on !#e ns!a ns!a""me ""men! n! bass bass.. Bn Bn Janua January ry 1,200 1,200-, -, "edg "edger er a%%oun!s a%%oun!s n%"uded !#e $o""o&ng ba"an%es6 Ins Ins!a""me "men! 9e%e'a 'ab"e Ins! Ins!a" a""me "men! n! 9e%e' e%e'ab ab"e "e 8e$erred ross *ro/! 8e$erred ross *ro/!
) ) ) )
200- ))))))))))))))) ))))))) ))))))) ))))))) )))) 2007 2007 )))) )))))) )))) )))) )))) ))))) ))))) )))) )))) )))) )))) )))) )))) 200- )))))))))))))))))))))))))))) 2007 ))))))))))))))))))))))))))))
*
(,+00 1++, 1++,00 000 0 11,++0 -2,000
Bn 8e%ember 1,200(, a%%oun! ba"an%es be$ore ad>us!men!s $or rea"ed gross pro/! on ns!a""men! sa"es &ere6 Ins!a""men! 9e%e'ab"e Ins!a""men! 9e%e'ab"e Ins!a""men! 9e%e'ab"e 8e$erred ross *ro/! 8e$erred ross *ro/!
) 200- )))))))))))))))))))))))))))) ) 2007 )))))))))))))))))))))))))))) ) 200( )))))))))))))))))))))))))))) ) 200- )))))))))))))))))))))))))))) ) 2007 ))))))))))))))))))))))))))))
*
none 2,000 100,+00 11,++0 -2,000
8e$erred ross *ro/!
)
200( ))))))))))))))))))))))))))))
7+,(10
Ins!a""men! sa"es on 200( &ere made a! 2 abo'e %os! o$ mer%#andse. T#e !o!a" rea"ed gross pro/! on ns!a""men! sa"es n 200(6 a. b. 7.
*12,+10 3(,310
%. d.
*37,+10 102,(
4*#"C*A5 8po"o 8po"og g Comp Compan any y se""s se""s app"a app"an%e n%ess on on !#e !#e ns ns!a !a""m ""men en!! bass bass.. e"o e"o& & are are n$orm n$ormat aton on $or $or !#e pas! !#ree years6 200( 2007 200Ins!a""men! sa"es )))))))))))))))))) *7+0,000 *-00,000 *00,000 Cos! o$ sa"es ))))))))))))))))))))))) +0,000 7+,000 2-0,000 Co""e%tons on6 200( 200( ns ns!a""me ""men n! sa"es "es ))) ))) 27+,0 7+,000 00 2007 ns!a""men! sa"es ))) 1(0,000 20,000 200- ns!a""men! sa"es ))) 12+,000 120,000 1+0,000 9epossessons on de$au"!ed a%%oun!s n%"uded one made on a 200( sa"e $or &#%# !#e unpad ba"an%e amoun!ed !o *+,000. T#e depre%a!ed 'a"ues o$ !#e app"an%e repossessed &as *2,+00. T#e rea"ed gross pro/! n 200( on %o""e%tons o$ 200( ns!a""men! sa"es &as6 a. *10(,000 %. *221,2+0 b. 110,000 d. 221,-00 4*#"C*A5
(.
Bn Janu January ary 1, 1, 2007, 2007, Ar! Ar! Comp Compan any y so"d so"d !s !s d"e d"e p"an p"an!! $a%" $a%"!y !y !o !o Ton Tony y, In%. In%. $or $or *1,0 *1,0+0, +0,000 000.. Bn !#s da!e, !#e p"an! #ad a depre%a!ed %os! o$ *7+,000. !ony pad *1+0,000 %as# on January 1,2007 and sgned a *300,000 no!e bearng n!eres! a! 10. T#e no!e &as payab"e payab"e n !#ree annua" ns!a""men!s ns!a""men!s o$ *00,000 begnnng January 1,200(. Ar! appropra!e"y a%%oun!ed $or !#e sa"e under !#e ns!a""men! me!#od. Tony made tme"y paymen! o$ !#e /rs! ns!a""men! on January 1, 200( o$ *30,000 &#%# n%"uded n!eres! o$ *30,000 da!e o$ paymen!. A! 8e%ember 1, 200(, Ar! #as a de$erred gross pro/! o$ a. b.
* 0 20(,000
%. d.
*+0(,200 03,-0 4AIC*A5
3.
Bn B%!obe B%!oberr 1, 2007, 2007, 9od 9ode" e" Corp Corpor orat aton, on, a rea" rea" es!a! es!a!e e de'e" de'e"ope operr, so"d so"d "and "and !o !o err erry y Company $or *+,000,000. erry pad %as# o$ *-00,000 and sgned a !en)year *,00,000 no!e bearng n!eres! 12. T#e %arryng amoun! o$ !#e "and &as *,000,000 on !#e da!e o$ sa"e. T#e no!e &as payab"e payab"e n $or!y Duar!er"y prn%pa" ns!a""men!s ns!a""men!s o$ *110,000 begnnng January 2,200(. 9ode" appropra!e"y a%%oun!s a%%oun!s $or !#e sa"e under !#e %os! re%o'ery me!#od. Bn January 2, 200(, erry pad !#e /rs! prn%pa" ns!a""men! ns!a""men! *110,000 and n!eres! o$ *12,000. ;or !#e year ended 8e%ember 1,200(, &#a! !o!a" amoun! o$ n%ome s#ou"d 9ode" re%ogne $rom !#e "and sa"e and !#e /nan%ng
a. b. 10.
* 0 20(,000
%. d.
*+0(,200 03,-0
4AIC*A5 Asser Asser Compu Compu!e !err Co. beg began an opera operaton ton a! a! !#e begn begnnn nng g o$ 200(. 200(. 8urn 8urng g !#e year year,, ! #ad %as# sa"es o$ *-,(7+,000 and sa"es on ns!a""men! bass o$ *1-,+00,000. Asser adds a mar:up on %os! o$ 2+ on %as# sa"es and +0 on ns!a""men! sa"es. Ins!a""men!s re%e'ab"e a! !#e end o$ 200( s *-,-00,000. To!a" gross pro/! $or 200( s6 a. b.
*1,7+,000 ,00,000
%. d.
*,-7+,000 ,+7+,000
11.
4Adap!ed5 Conra Conrado do Mo!o Mo!ors rs se""s se""s "o% "o%a"" a""y y manu$ manu$a%! a%!ur ured ed >eepne >eepneys ys on !#e !#e ns! ns!a"" a""men men!! bass. bass. T#e T#e n$ormaton presen!ed be"o& re"a!es !o operatons durng !#e pas! !#ree years. 200( 2007 200Cos! o$ ns. sa"es )))))))))))) *(,7-+,12+ 8e%. 1 ba"an%e6 Ins. Ins. 9 b"e, "e, 200( 00( ))) )))) 3,72( ,72(,1 ,12+ 2+ Ins. 9 b"e, 2007 )))) ,02+,000 Ins. 9 b"e, 200- )))) ross pro/! ra!e )))))))))))) 2
*7,700,000
*,3+0,000
(,(7,+00 1,+12,+00 0
,(12,+00 2(
Conrado Mo!ors uses !#e ns!a""men! me!#od o$ a%%ountng, &#a! &ou"d !#e %ompany repor! as !o!a" rea"ed gross pro/! $or !#e year 200( a. b. 12.
*1,012,000 ,0,2+0
%. d.
*,7+,7+0 -,33,2+0
4Adap!ed5 T#e 'ar 'arous ous do%u do%umen men!s !s and and re%or re%ords ds &#%# &#%# &er &ere e re%o' re%o'er ered ed mmed mmeda! a!e"y e"y aer aer a /re /re guFed !s premses, EMC Mar:etng Co. ga!#ered !#e $o""o&ng n$ormaton 4!#e %ompany uses !#e ns!a""men! me!#od o$ a%%ountng56 200-
20 2007
200(
Ins!a""men!s sa"es )))))))))))))))*+ )*+00,00 *(00,000 * 45 Cos! o$ ns. sa"es )))))))))))))))) 45 -00,000 45 ross *ro/! on ns!. sa"es 45 45 2(2,000 Co""e%tons on6 200- sa"es )))))))))))))) +0,000 2+0,000 100,000 2007 sa"es )))))))))))))) ) 200,000 +00,000 200( sa"es )))))))))))))) ) ) 00,000 9ea"ed gross pro/! Bn ns!a""men!s sa"es 11,000 45 21,000 ased on !#e n$ormaton g'en abo'e, !#e %os! o$ ns!a""men! sa"es $or !#e year 200( &as6 a. *300,000 %. *32,000 b. 31(,000 d. 30,000 4Adap!ed5
1.
EMC Mo! Mo!or ors, s, a dea"er dea"er o$ o$ mo!or mo!or 'e#%" 'e#%"e, e, sa"es sa"es e@% e@%"us "us'e 'e"y "y on ns! ns!a"" a""men men!! bass. bass. Bne Bne o$ !s !s %us!omers, Mr. Ambo pur%#ased a mo!or%y%"e $or *+,7+. T#e %os! !o EMC &as *2+,10. Aer ma:ng an nta" paymen! o$ *-,0+0, Mr. Ambo de$au"!ed on subseDuen! paymen!s. paymen!s. EMC "os! no tme n repossessng !#e mo!or 'e#%"e &#%#, by !#s tme, &as apprased a! a 'a"ue o$ *12,-+0. EMC #ad !o n%ur addtona" %os! o$ reparsremode"ng o$ *1,-+0 be$ore !#e mo!or 'e#%"e &as subseDuen!"y reso"d $or *27,+00 !o Mr. Mr. Joey &#o made an nta" paymen! paymen! o$ *-,(7+. =o& mu%# pro/! &as rea"ed on !#e sa"e !o Mr. Joey a. b.
1.
*,02+ ,00
%. d.
*,+7+ ,(+0
4Adap!ed5 Lane Lane Compa Company ny,, &#%# &#%# began began oper operat atons ons on on Januar January y 1, 200(, 200(, appr appropr opra! a!e"y e"y uses uses !#e !#e ns!a""men! me!#od o$ a%%ountng. T#e $o""o&ng n$ormaton per!ans !o LaneGs operatons $or !#e year 200(6 Ins!a""men! sa"es ))))))))))))))))))))))))))))))))))))))))))))) *1,000,000 9egu"ar 9egu"ar sa"es sa"es ))))))))))) )))))))))))))))))) )))))))))))) )))))))))))) )))))))))))) ))))))))))) )))))))))))) )))))))) )) -00,000 -00,000 Cos Cos! o$ ns ns!a""m a""men en!! sa"e sa"ess )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) +00, +00,00 000 0 Cos! o$ regu"ar sa"es ))))))))))))))))))))))))))))))))))))))))) 00,000 ene enera ra"" and and adm admn ns! s!ra rat' t'e e e@pe e@pens nses es )))) )))))) )))) ))))) ))))) )))) )))) )))) )))) )))) 100, 100,00 000 0 Co"" Co""e% e%to tons ns on ns! ns!a" a""m "men en!! bass bass )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) 200, 200,00 000 0
1+.
T#e de$erred gross pro/! a%%oun! n LaneGs 8e%ember 1, 200( ba"an%e s#ee! s#ou"d be a. *1+0,000 %. *00,000 b. 20,000 d. +00,000 4AIC*A5 T#e Cen!ra Cen!ra"" *"ans *"ans Subd'so Subd'son n se""s se""s resdent resdenta" a" subd subd'son 'son "o!s on ns!a""men ns!a""men!! bass. bass. T#e $o""o&ng n$ormaton &as !a:en $rom !#e %ompanyGs re%ords as a! 8e%ember 1, 200(. Ins!a""men! A%%oun!s 9e%e'ab"e6 Janu Januar ary y 1, 200( 200( )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) *7++ *7++,0 ,000 00 8e%e 8e%emb mber er 1, 1, 200( 200( )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) (0, (0,00 000 0
1-.
*7(,000 3,7+0
%. d.
*27,+00 (3,2+0
4*#"C*A5 ema, ema, In%. In%. bega began n opera operaton tonss on Januar January y 1, 200( 200( and appr approp opra ra!e !e"y "y uses uses !#e ns! ns!a"" a""men men!! me!#od o$ a%%ountng. T#e $o""o&ng da!a are a'a"ab"e $or 200(6 Ins!a""men Ins!a""men!! a%%o a%%oun! un!ss re%e' re%e'ab"e, ab"e, 121200( 121200( )))))))))))) ))))))))))))))) ))) Ins! Ins!a" a""me "men! n! sa" sa"es es $or $or 200( 200( )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) ros rosss pro/ pro/!! on sa"es sa"es ))))) ))))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) ))
*-00,000 *-00,000 1,0+ 1,0+0, 0,00 00 0 0
17.
a"an%e o$ de$erred gross pro/! on sa"es a%%oun!6 2007 )))))) ))))))) ))))))) ))))))) ))))))) )))))))) ))))))) ))))))) ))))))) ))))))) ))) 200( )))))))))))))))))))))))))))))))))))))))))) ross pro/! ra!e on sa"es )))))))))))))))))))))))))))
12 121 1200 2007 7
12 121 120 200 0(
*00,000
*120,000 0,000 0
0
T#e ns!a""men! a%%oun!s a%%oun!s re%e'ab"e ba"an%e a! 8e%ember 1, 200( s a. b. 1(.
*1,000,000 1,100,000
%. d.
*1,00,000 1,+00,000
Cen!e, Cen!e, In%. appropra appropra!e"y !e"y uses !#e ns!a""men ns!a""men!! me!#od me!#od o$ a%%ount a%%ountng ng !o !o re%o re%ogn gne e n%ome n%ome n !s /nan%a" s!a!emen!s. Some pertnen! da!a re"atng !o !#s me!#od o$ a%%ountng n%"ude6 200- 2007 200( Ins!a""men! sa"es )))))))))))))))))))) Cos! o$ ns!a""men! sa"es )))))))))))
*00,000 22+,000
*7+,000 2(+,000
*-0,000 2+2,000
ross pro/! ))))))))))))))))))))))))))
* 7+ 7+,000
* 30 30,000
*10(,000
2+
2
9a!e o$ gross pro/! on ns!a""men! Sa"es )))))))))))))))))))))))))
200-
2007
a"an%e o$ de$erred gross pro/! a! !#e year ear end6 end6 ;ro ;rom 200200- sa"e sa"ess *+2,+ +2,+00 00 ;rom 2007 sa"es ;rom 200( sa"es To!a" ))))))))))))))))))))))))))))))))) *+2,+00 *-3,000 *(1,000
0
200( *1+, *1+,00 000 0 +,000
* ) 3,000 72,000
#a! amoun! o$ ns!a""men! a%%oun!s re%e'ab"e s#ou"d be presen!ed n Cen!eGs 8e%ember 1, 200( ba"an%e s#ee! a. b.
*270,000 277,+00
%. d.
*273,000 00,000
13.
4AIC*A5 T#e $o"" $o""o& o&ng ng se"e% se"e%!e !ed d a%%ou a%%oun! n!ss appea appeared red n !#e !#e !ra" !ra" ba"an ba"an%e %e o$
Cred!
Ins! Ins!a" a""me "men! n! 9e%e' e%e'ab ab"e "e 2007 2007 sa"es sa"es )))) )))))) )))) )))) * Ins!a""men Ins!a""men!! 9e%e'a 9e%e'ab"e b"e 200( sa"es ))))))))) ))))))))) In'en!ory, 8e%ember 1, 2007 ))))))))))))))) *ur%#a *ur%#ases ses )))))) ))))))))) )))))) )))))) )))))) )))))) )))))) )))))) )))))) )))))) )))))) )))))) ))))) 9epossesson )))))))))))))))))))))))))))))))))))) Ins!a""men! Sa Sa"es )) )))))))))))))))))))))))))))))))) 2+,000 Sa"es 49egu"ar5 )))))))))))))))))))))))))))))))))) (+,000
415 *123,2-2.+0? 415 (+,+00.00? 415 12 123,2-2.+0? 415 (+,+00.00?
425 425 *41,2-2.+05 425 41,2-2.+05 425 1,2-2.+0 425 1,2-2.+0 4*#"C*A5
20.
"ora "ora Corp Corpor orat aton on s!ar! s!ar!ed ed oper operat atons ons on on Januar January y 1, 2007 2007 se""ng se""ng #ome #ome app app"a "an%e n%ess and and $urn!ure se!s bo!# $or %as# and on ns!a""men! bass. 8a!a on !#e ns!a""men! sa"es operaton o$ !#e %ompany ga!#ered $or !#e years endng 8e%ember 1, 2007 and 200( &ere as $o""o&s6
Ins!a""men! sa sa"es )) )))))))))))))))))))))))))))))))) Cos! o$ ns!a""men! sa"es ))))))))))))))))))))))) Cas# %o""e%!ed on ns!a""men! sa"es 2007 ns!a""men! %on!ra%!s )))))))))))) 200( ns!a""men! %on!ra%!s )))))))))))) Addtona" n$ormaton6
2007 *00,000 20,000
200( *+00,000 +0,000
210,000 )
1+0,000 00,000
Bn January +, 2003 an ns!a""men! sa"e n 2007 &as de$au"!ed and !#e mer%#andse &!# an apprased 'a"ue o$ *+,000 &as repossessed. 9e"a!ed ns!a""men! ns!a""men! re%e'ab"e ba"an%e on January +, 2003 &as *(,000.
415 T#e ba"an%e o$ 8e$erred ross *ro/! on 8e%ember 1, 200(, and 425 !#e gan or 4"oss5 on repossesson n 2003. a. b.
21.
415 *10,000? 425 *200 415 7-,000? 42 5 200
%. d.
415 * 7-,000? 425 *1,(00 415 10,000? 425 42 42005 4*#"C*A5
Jane Jane En!erp En!erprs rses es uses uses !#e !#e ns!a ns!a""m ""men en!! me!#od me!#od o$ a%%o a%%oun untn tng g and ! #as #as !#e !#e $o""o $o""o&n &ng g da!a da!a a! !#e year)end6 ross margn %os! )))))))))))))))))))))))))))))))))))))))))))))))))))))) --)2
22.
*(0,000 ++2,000
%. d.
*-(,000 (0,000
4*#"C*A5 T#e Cnd Cndy y, In%. beg began an oper operat atng ng a! a! !#e begn begnnn nng g o$ !#e %a"e %a"enda ndarr year year 200( and, and, usn usng g !#e ns!a""men! me!#od o$ a%%ountng, presen!ed !#e $o""o&ng da!a $or !#e /rs! year6 Ins!a""men Ins!a""men!! sa"es )))))))))))) )))))))))))))))))) )))))))))))) )))))))))))) )))))))))))) )))))))))))) )))))))))))) )))))))))) )))) *00,000 *00,000 ross ross margn margn based on %os! %os! ))))))))))) ))))))))))))))))) )))))))))))) )))))))))))) )))))))))))) )))))))))) )))) --)2 --)2 In'en! In'en!ory ory,, 8e%. 1, 200( )))))))))))) ))))))))))))))))) )))))))))))) )))))))))))) ))))))))))) )))))))))))) )))))))) (0,000 (0,000 enera" and admns!rat'e admns!rat'e e@penses )))))))))))))))))))))))))))) 0,000 A%%oun! A%%oun!ss re%e' re%e'ab"e, ab"e, 8e%. 1, 200( )))))))))))) )))))))))))))))))) )))))))))))) ))))))))))) ))))) 20,000 20,000 T#e ba"an%e o$ !#e de$erred gross pro/! a%%oun!, end o$ 200( s#ou"d be6 a. b.
*132,000 12(,000
%. d.
*3-,000 (0,000 4*#"C*A5
2.
T#ese T#ese da!a da!a per!a per!an n !o ns!a ns!a""me ""men! n! sa"es sa"es o$ Kos! Kos!er er S!o S!ore re66 8o&npaymen!6 20 Ins!a""men! Ins!a""men! sa"es6 *+-,000 n 200-? *7(+,000 n 2007? and, *3-(,000 n 200( Mar:)up on %os!6 + Co""e%tons aer do&n paymen!6 paymen!6 0 n !#e year o$ sa"e, + n !#e year aer, and 2+ n !#e !#rd year. Compu!e !#e 415 Ins!a""men! A%%oun!s A%%oun!s 9e%e'ab"e a! !#e end o$ 200(, and 425 !o!a" unrea"ed gross gross pro/! a! !#e end o$ 200(. a. 415 *-21,-0? 425 *217,+7 %. 415 *-,-0? 425 *1-1,1-b. 415 -,-0? 425 217, +7 d. 415 *-21,-0? 425 1-1, 1-4*#"C*A5 Bn Janua January ry 2, 200(, 200(, !#e !#e $o"" $o""o& o&ng ng are are some some da! da!a a o$ !#e !#e C"are C"are =""s =""s Subd Subd's 'son on,, a $u""y $u""y)) de'e"oped subd'son &#%# s!ar!ed s!ar!ed sa"es n 200(. A"" sa"es are on /'e year ns!a""men! p"an. T#e sa"es !erms pro'de $or a 1+ do&npaymen! do&npaymen! , &!# !#e ba"an%e payab"e n -0
-
2.
mon!#"y ns!a""men!s. ns!a""men!s. An n!eres! o$ 12 per annum on !#e unpad amoun! s !o be pad &!# !#e mon!#"y ns!a""men!s. ns!a""men!s. Area o$ subd'son6 200 200 subd subd' 's so on n "o!s "o!s,, 'ar 'aro ous us s ses es ))) ))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) 9oad 9oad "o!s "o!s )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) *ar: *ar:s, s, res reser' er'ed ed $or $or pub" pub"% % use use ))) )))))) )))))) ))))) ))))) )))))) ))))) ))))) ))))) )))) )))) )))) )))) ))
+2,2 +2,2+0 +0 SD. SD. M. M. 2,7 2,7+0 +0 SD. SD. M. ,00 ,000 0 SD. SD. M.
To!a" ))))))))))))))))))))))))))))))))))))))))))))))))))))))))))))) (0,000 SD. M. Cos! o$ subd'son Cos! Cos! o$ ra& "and "and,, (0, (0,00 000 0 sD. sD. m. )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) Sur' Sur'ey eyn ng g and and "ay "ayng ng monu monume men! n!ss )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) ;"" ;""n ng g and and "e'e "e'e" "ng ng sub) sub)gr grad ade e "and "and )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) Curb Curbs, s, guFe guFers rs,, and and dra drana nage ge )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) 9oad oad bra% bra%n ng, g, /"" /""ng ng,, and and pa' pa'ng ng )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) E"e% E"e%!r !r% % "g# "g#!! pos pos!s and and "ne "ness )))) )))))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )))) )) To!a" o!a" ))))))) ))))))))))) )))))))) )))))))) )))))))) )))))))) ))))))) )))))) )))))) )))))) )))))) )))))) )))))) )))))) )))))) )))))) )))
*2, *2,7+ 7+,0 ,000 00 +,0 +,000 00 10, 10,00 000 0 10, 10,00 000 0 2,17 2,17+, +,00 000 0 130, 130,00 000 0
*+,22+ *+,22+,00 ,000 0
T#e !o!a" se""ng pr%e o$ !#e 200 subd'son "o!s, per !#e pr%e "s!s, s *3,+00,000. To!a" ns!a""men! ns!a""men! sa"es n 200( 200( ))))))))))))))))))))))))))) *,+0,000 Ins!a""men! re%e'ab"e, re%e'ab"e, 8e%. 1, 200( ))))))))))))))))))) 1,+3,-00 In!eres! In!eres! n%ome n 200( )))))))))))))))))))))))))))))))))))) +20,00 Bperatng Bperatng e@penses n 200( ))))))))))))))))))))))))))))))) -(2,10 Compu!e !#e 415 unrea"ed gross pro/! on 8e%ember 1, 200(, and 425 !#e ne! n%ome $or 200(. a. b.
2+.
415 *717,+70? 425 *1,++,20 415 717,+70? 425 -7,100
%. d.
415 * (77,00? 425 *-7,100 415 1,++2,+00? 425 1,++,20 4*#"C*A5
T#e Ja>a Ja>a Sa"es Sa"es Co. Co. &#%# &#%# bega began n !#e app" app"an an%es %es bus busnes nesss on Janua January ry 1, 200200- repor repor!s !s gross gross pro/! on !#e ns!a""men! bass. T#e $o""o&ng n$ormaton re"at'e !o !#e ns!a""men! sa"es are a'a"ab"e6 200-
2007 2007
200(
Ins!a""men! sa"es )))))))))))))))))))))) Cos! o$ ns!a""men! sa"es )))))))))))))
*-0,000 270,000
*7+,000 271,(7+
*+0,000 2,000
ross pro/! ))))))))))))))))))))))))))))
*30,000
10,12+
12-,000
Co""e%tons6 200- ns!a""men! %on!ra%!s )) *-7,+00 2007 ns!a""men! %on!ra%!s )) 200( ns!a""men! %on!ra%!s )) 8e$au"!s6
*112,+00 71,2+0
*10(,7+0 120,000 3,7+0
* 1(,7+0
* 22,+00
3, 7+0
3,000 2,000 1,+00
415T#e rea"ed gross pro/! on ns!a""men! sa"es durng 200(, and 425 !#e "oss on repossesson durng !#e year 200(6 a. b.
2-.
415 *(-,7.+0? 425 *12,22+ 415 30 30,00.00? 425 11 11,77+
%. d.
415 *(-,7.+0? 425 *11,77+ 415 (( ((,-(7.+0? 425 ,27+ 4*#"C*A5
T#e Mer% Mer%y y Sa"es Sa"es Co. Co. emp" emp"oy oyss !#e perp perpe!u e!ua" a" n'e n'en! n!ory ory bas bass s n !s !s a%%o a%%oun untn tng g $or $or ne& %ars. Bn Augus! 1+, 2007, a ne& %ar &as so"d !o 9ose Cas!ro &!# a "s! pr%e o$ *220,000 %ostng *1-+,000. I! gran!ed Ms. Cas!ro an a""o&an%e o$ *(+,000 $or #er o"d %ar as a !rade)n, !#e %urren! 'a"ue o$ &#%# &as estma!ed !o be *(1,700. T#e ba"an%e o$ *1+,000 &as payab"e as $o""o&s6 Cas# a! tme o$ pur%#ase *+,000, ba"an%e n 20 mon!#"y paymen! paymen! o$ *+,000, /rs! paymen! beng made on Sep!ember 1, 2007. Bn Apr" 1, 200(, Ms. Cas!ro de$au"!ed n !#e paymen! o$ Mar%# 1, 200( ns!a""men!. T#e ne& %ar so"d &as repossessed? !s 'a"ue !o !#e se""er s *0,000. 4use !&o de%ma" p"a%es $or gross pro/! per%en!age5 415 T#e !o!a" rea"ed rea"ed gross gross pro/! on ns!a""men! ns!a""men! sa"es n 2007 2007 and 425 gan gan 4"oss5 on repossesson n 200(. a. %.
27.
415 *2,-17? 425 *41+,(115 415 7,((3? 425 41,23(5
b. d.
415 *2,-17? 425 *41,23(5 415 (7,3--? 425 1,23( 4*#"C*A5
ann anne e Co., Co., so"d so"d a %ompu %ompu!e !err on ns! ns!a"" a""men men!! bass bass on B%! B%!obe oberr 1, 200(. 200(. T#e T#e un! un! %os! %os! !o !o !#e %ompany &as *(-,00, bu! !#e ns!a""men! se""ng pr%e &as se! a! *122,00. Terms o$ paymen! n%"uded !#e a%%ep!an%e o$ a used %ompu!er &!# a !rade)n a""o&an%e o$ *,200. Cas# o$ *7,200 &as pad n addton !o !#e !raded)n %ompu!er &!# !#e ba"an%e !o be pad n !en mon!#"y ns!a""men!s due a! !#e end o$ ea%# mon!# %ommen%ng !#e mon!# o$ sa"e.
I! &ou"d reDure *1,(00 !o re%ondton !#e used %ompu!er so !#e! ! %ou"d be reso"d $or *-,000. A 1+ gross pro/! &as usua" $rom !#e sa"e o$ used %ompu!er. T#e rea"ed gross pro/! $rom !#e 200( %o""e%tons amoun!ed !o6 a. b.
* + ,7 - 0 1,100
%. d.
*11,+20 (,3-0 4Adap!ed5
2(. ;o""o&ng da!a da!a per!an !o Maba! Company Company &#%# se""s app"an%es on !#e ns!a""men! bass6 2002007 200( Ins!a""men! Sa"es*30,000 * 20,000 *(0,000 Cos! o$ Sa"es.. Sa"es.. 27,300 2,-00 2((,000
200Ins!a""men! A%%oun!s Ins!a""men! ba"an%es6 Jan. 1, 200(*2,000 8e%. 1, 200( )
;rom Sa"es Made n 2007
*00,000 -0,000
200 200(
*20,000
9epossessons 9epossess ons on de$au"!ed a%%oun!s &ere made durng 200(, as $o""o&s6
A%%oun! ba"an%es. *10,000 Apprased 'a"ue o$ repossessed Mer%#andse Mer%#andse ,+00
;rom Sa"es Made In 20 2007
200(
*+,000 ,+00
415 T#e !o!a" rea"ed gross pro/! on ns!a""men! ns!a""men! sa"es n 200(, and 425 ne! gan 4"oss5 on repossesson repossess on on de$au"!ed %on!ra%!s o$ 2007 and 200(.
23. Mr. Mr. Matas s a dea"er n app"an%e &#o se""s on an ns!a""men! bass. A re$rgera! re$rgera!or or &#%# orgna""y %os! *3,20 &as &as so"d by #m $or *1-,+00 !o Jose &#o made a do&n paymen! paymen! o$ *2,200, bu! de$au"!ed n subseDuen! paymen!s. Mr. Matas repossessed !#e re$rgera!or a! an apprased 'a"ue o$ *,-00. To mpro'e !s sa"ab"!y, #e e@pended *-00 $or re%ondtonng. =e &as ab"e !o se"" !#e re$rgera!or !o *edro $or *10,000 a! a do&n paymen! o$ !#e /rs! ns!a""men! o$ *2,+00. T#e rea"ed gross pro/! $rom !#e 415 /rs! ns!a""men! ns!a""men! sa"e)Jose6 425 $rom !#e se%ond ns!a""men! sa"e)*edro are6 a. 415 *3-(? 425 *1,+0 b. 415 2-? 425 1,200
%. 415 *3-(? 425 *1,200 d. 415 2,0? 425 1,+0
0. T#e Mo"no ;urn!ure Company Company appropra!e"y used !#e ns!a""men! ns!a""men! sa"es me!#od n a%%ountng a%%ountng $or !#e $o""o&ng ns!a""men! sa"e. 8urng 200(, Mo"no so"d $urn!ure !o an nd'dua" $or *,000 a! a gross gross pro/! o$ *1,200. Bn June 1, 200(, !#s ns!a""men! ns!a""men! a%%oun! a%%oun! re%e'ab"e #ad a ba"an%e o$ *2,200 and ! ! &as de!ermned !#a! no $ur!#er %o""e%tons &ou"d be made. Mo"no, !#ere$ore, repossessed !#e mer%#andse. #en rea%Dured, !#e mer%#andse mer%#andse &as apprased as beng &or!# on"y *1,000. In order !o mpro'e !s sa"ab"!y, enga" n%%ured %os!s o$ *100 $or re%ondtonng. Norma" pro/! on resa"e s *200. #a! s#ou"d be !#e "oss on repossesson aFrbu!ab"e !o !#s mer%#andse a. *220 b. -20
%. d.
*20 ((0 4Adap!ed5
1. Mar%e"ano Sa"es Corp. a%%oun!s a%%oun!s $or sa"es on !#e ns!a""men! bass. T#e ba"an%es o$ !#e Con!ro" a%%oun!s $or ns!a""men! Con!ra%!s 9e%e'ab"e a! !#e begnnng and end o$ 200( &ere6 Jan. 1, 200( 8e%. 1, 200( Ins!a""men! Con!ra%!s 9e%e'ab"e) 200- .. * 2,020 Ins!a""men! Con!ra%!s 9e%e'ab"e) 2007 .. ,-0 *-7,0 Ins!a""men! Ins!a""men! Con!ra%!s Con!ra%!s 9e%e'ab"e) 200( .. ) 10,030 8urng 200(, !#e %ompany repossessed a re$rgera!or re$rgera!or &#%# #ad been so"d n 2007 $or *+,00 and and *,200 #ad #ad been %o""e%!ed pror !o de$au"!. de$au"!. T#e %ompany %ompany sa"es and %os! o$ sa"es /gures are summared be"o&6 200Ne! Sa"es. Sa"es. *(0,000 Cos! o$ Sa"es... Sa"es... 27,000
2007
200(
*2,000 2(+,120
*-02,000 73,2-0
Mar%e"ano Sa"es Corp. 'a"ues !#e repossessed goods a! mar:e! 'a"ue. T#e resa"e pr%e o$ !#e repossessed mer%#andse amoun!ed !o *1,700. 415 T#e gan 4"oss5 or repossesson? repossesson? and 425 425 !#e !o!a" !o!a" rea"ed gross gross pro/! on ns!a""men! ns!a""men! sa"es $or !#e year 200(6 a. 415 *4(15? 425*172,(+2.+0 %. 415 *2(? 425*172,(+2.+0 b. 415 4(15? 425 71,00-.70 d. 415 2(? 425 71,00-.70 2. e""e, In%. s!ar!ed s!ar!ed operaton operaton a! !#e begnnng o$ 200(, se""ng #ome app"an%es app"an%es e@%"us'e"y on !#e ns!a""men! bass. 8a!a $or 2007 and 200( $o""o&s6
2007 200( Ins!a""men! sa"es. * -00,000 *7+0,000 Cos! o$ ns!a""men! sa"es. 20,000 +0,000
2007 ns!a""men! ns!a""men! a%%oun!s, a%%oun!s, end end 200( ns!a""men! a%%oun!s, end
2(+,000 )
22,+00 00,000
Bn May 1, 200(, a 2007 ns!a""men! a%%oun! o$ *7,+00 &as de$au"!ed and !#e app"an%e &as repossessed. Aer re%ondtonng a! a %os! o$ *7+0, T#e repossessed app"an%e &ou"d be pr%ed !o se"" $or *0,000. T#e gan 4"oss5 on repossesson amoun!ed !o6 a. * ,00 ,000 0 b. 43,0 43,000 0055
%. * 3,0 3,000 d. 4,7 4,7+0 +055 4Adap!ed5
. Sn%e !#ere s no reasonab"e bass $or estmatng estmatng !#e degree o$ %o""e%tb"!y. %o""e%tb"!y. "oopers Company uses !#e ns!a""men! me!#od o$ re'enue re%ognton re%ognton $or !#e $o""o&ng sa"es6
200( 2007 *+0,000 *+0,00 0 *00,000
Sa"es Co""e%ton $rom6 2007 sa"es.. 200( sa"es.. A%%oun!s &rFen)o6 2007 sa"es.. 200( sa"es.. ross pro/! per%en!age
+0,000 1+0,000 7+.000 2+,000 0
100,000 )0) 2+,000 )0) 0
#a! amoun! s#ou"d "oopers repor! as de$erred gross pro/! n !s 8e%ember 1, 200(, ba"an%e s#ee! $or !#e 2007 and 200( sa"es a. *7+, *7+,00 000 0 b. (0,0 (0,000 00
%. *112 *112,+ ,+00 00 d. 12+, 12+,00 000 0
. James Sm!# App"an%e Co., Co., so"d an eDupmen! %ostng %ostng *10,000 $or *1-,000 on Sep!ember 0, 2007. T#e do&n paymen! &as *1,-00 and !#e same amoun! &as !o be pad a! !#e end o$ ea%# su%%eedng mon!#. In!eres! &as %#arged on !#e unpad ba"an%e o$ !#e %on!ra%! a! o$ 1 a mon!#, paymen!s beng %onsdered as app"yng /rs! !o a%%rued n!eres! n!eres! and !#e ba"an%e !o prn%pa". Aer payng a !o!a" o$ *-,00, !#e %us!omer de$au"!. T#e eDupmen! &as repossessed n January +, 200(. I! &as estma!ed estma!ed !#a! !#e eDupmen! #ad a 'a"ue o$ +,-00. Compu!e !#e 415 !o!a" rea"ed gross gross pro/! on ns!a""men! ns!a""men! sa"es and 425 !#e gan 4"oss5 on repossesson 4rounded5
a. b.
415 415 *2, *2,2( 2(?? 425 425 *+21 *+21 415 2,00? 425 00
%. d.
415 415 *2, *2,00 00?? 425 425 * 400 40055 415 2,2(? 425 4+215
+. Bn Sep!ember 0, 200(, arry boug#! boug#! a %ar $or *,-00,000. A do&n do&n paymen! paymen! o$ *1,-00,000 &as made, &!# !#e ba"an%e due n 10 mon!#"y ns!a""men!s, ns!a""men!s, !#e /rs! !o be made a! !#e end o$ B%!ober. arry s !o ma:e mon!#"y paymen!s o$ *200,000 p"us n!eres! n!eres! on !#e unpad ba"an%e a! 12. #a! s !#e !o!a" %o""e%ton on January 1, 2003 a. b.
*200,000 21,000
%. d.
*21-,000 21(,000
-.
*1, *1,000, 000,00 000 0 1,200,000
%. d.
*1,2 *1,22 2,73 ,73-. -.30 30 1,20,7+.+1
7.
10 12
%. d.
2.7 3.(
(. S#aron Company Company uses !#e ns!a""men! sa"es me!#od n a%%ountng a%%ountng $or !s ns!a""men! sa"es. Bn January 1,200(, S#aron Company #ad an ns!a""men! a%%oun! re%e'ab"e $rom 9o&ena &!# a ba"an%e o$ *1(,000. 8urng 200(, *,000 &as %o""e%!ed $rom 9o&ena . #en no $ur!#er %o""e%ton %ou"d be made, !#e mer%#andse so"d !o 9o&ena &as repossessed. T#e mer%#andse #ad a $ar mar:e! 'a"ue o$ *-,+00 aer !#e %ompany spen! $or *-00 $or re%ondtonng re%ondtonng o$ !#e mer%#andse. T#e mer%#andse &as orgna""y so"d &!# a gross pro/! ra!e o$ 0. 8e!ermne !#e gan or "oss on repossesson and Cos! o$ 9epossessed Mer%#andse, Mer%#andse, 9espe%t'e"y? a. b.
*2,+ *2,+00 00 "oss "oss?? *-,+ *-,+00 00 *2,100 "oss? *-,+00
%. d.
*2,+ *2,+00 00 gan? an? *+,3 *+,300 00 *2,100 gan? *+,300 4Adap!ed5
3. T#e $o""o&ng !ab"e !ab"e are a'a"ab"e $or $or C#aro Company6 Company6 2002007 Ins!a""men! sa"es......... *+0,000 *(0,000 *
200(
Cos! o$ ns!a""men! sa"es. ross pro/! ross pro/! per%en!age... Cas# %o""e%tons 200- sa"es.. sa"es.. 2007 sa"es.. sa"es.. 200( sa"es.. sa"es.. 9ea"ed ross *ro/! on Ins!a""men! Ins!a""men! Sa"es 1,100
31,(00 2(,200 2+ 2+,000 10,000 20,000 +0,000 +,000 10,+00
* 10,+7+ 12,+00
%.
* 2,200 2+,27+
0. Bn January 1, 2007, JaneFe JaneFe Company Company so"d 20,000 sDuare sDuare me!ers me!ers o$ $arm"and $or *-00,000 !o M%#e""e, !a:ng n e@%#ange a 10 n!eres! bearng no!e JaneFe Company pur%#ased !#e $arm"and $arm"and n 2007 a! a %os! o$ *+00,000. T#e no!e &"" be pad n !#ree ns!a""men!s ns!a""men!s o$ *21,2-3 n%"udng n!eres! n!eres! ea%# on 8e%ember 1, 2007, 200(, and 2003. S#or!"y, aer !#e sa"e JaneFe Company "earns ds!ressng ne&s abou! M%#e""eGs /nan%a" %r%ums!an%es %r%ums!an%es and be%ause %o""e%ton s so un%er!an and de%des !o a%%oun! $or !#e sa"e usng !#e %os! re%o'ery me!#od. 8e!ermne !#e 9ea"ed ross *ro/! and In!eres! In%ome $or !#e year 200(, and
* )0)6 * )0)? * )0) * )0)6 * )0)? * 17,-2 * )0 ) 0)6 *-0,000? *177,-2 *,2? * )0)? * )0) 4Adap!ed5
1. Bn June 1, 200(, !#e ;os!er ;os!er Company so"d n'en!ory n'en!ory !o !#e
a. b. %. d.
*on!)o$)8e"'ery Me!#od *2+0,000 )0) -2,+00 2+0,000
Ins!a""men! Me!#od *-2,+00 2+0,000 2+0,000 -2,000
Cos! 9e%o'ery Me!#od *2+0,000 -2,+00 )0) )0)
2. Jo#nson En!erprses En!erprses uses !#e %os! %os! re%o'ery re%o'ery me!#od $or a"" ns!a""men! ns!a""men! sa"es. Comp"e!e !#e $o""o&ng !ab"e6 200-
2007
200(
Ins!a""men! sa"es.. *(0,000 *3+,000 * Cos! o$ ns!a""men! ns!a""men! sa"es. sa"es. +-,0+0 -(,2+0 ross pro/! per%en!age ( + Cas# %o""e%tons6 200- sa"es 2+,-00 -,00 +,-00 2007 sa"es 22,(00 200( sa"es 2,++0 9ea"ed ross *ro/! on Ins!a""men! Ins!a""men! Sa"es 1-,0+0 T#e ns!a""men! ns!a""men! sa"es sa"es n 200(6 a. b.
*32,17.+0 10+,000.00
d.
%. *112,-12.+0 13+,000.00 4Adap!ed5
.
%. *7,-13 d. 3,-00
.
%. -3 d. Canno! be de!ermned
+.
%. *,700 d. (,-00
-.
%. *,(00 d. Oero
7.
%. *1(,012 d. 22,00
4&!# *resen! Ha"ue ;a%!or5 I!ems ( !#roug# + are based on !#e $o""o&ng n$ormaton6 *ampanga *ampanga Indus!ra" se""s ma%#nery on !#e ns!a""men! p"an. Bn Sep!ember 1, 200(, *ampanga en!ered n!o an ns!a""men! sa"e %on!ra%! &!# MA *rodu%tons $or a s@) Pear perod. EDua" annua" paymen!s under !#e ns!a""men! sa"e are *1(7,+00 and are due on Augus! 1 o$ ea%# year begnnng n 2003.
Addtona" n$ormaton6 4a5 4b5
T#e %os! %os! o$ !#e !#e ma%# ma%#ne nery ry so"d so"d !o MA &as &as *-7, *-7,+00 +00.. T#e mp" mp"% %!! n!e n!eres res!! ra!e ra!e on !#e ns ns!a !a""me ""men! n! sa"e sa"e s s 10. 10.
*ampanga Indus!ra" uses %a"endar year as a resu"! o$ !#e abo'e !ransa%ton and use ee%t'e) In!eres! ra!e me!#od o$ amortng any ds%oun!. T#e presen! 'a"ue $a%!ors a! 10 $or s@ perods are as $o""o&s6 Pear 1 2 + -
*H o$ *I .3031 .(2- .7+1 .-(0 .-203 .+-+
*H o$ an annu!y o$ *I .3031 1.7++ 2.(-3 .1-33 .730( .++
(. Assumng !#a! %r%ums!an%es are su%# !#a! !#e %o""e%ton o$ !#e ns!a""men!s ns!a""men!s due under !#e Con!ra%! s reasonab"y assured, %ompu!e !#e rea"ed gross pro/! on ns!a""men! sa"es $or 200( 4rounded56 a. Oero b. *(1,2+0
%.
*173,113 d. (7,+00
3.
%. d.
*173,113 (7,+00
+2.
%. d.
*20-,0 +1,
+.
%. *102 *102,1 ,13 3
b. 101, 101,1 1( (
d.
113, 113,( (
+. 9omer 9ea"!y boug#! !&o ad>onng "o!s 4Lo! A and 5 &!# a !o!a" area o$ 1,-00 sD.m. Lo! A &as boug#! $or *1-0,000 IN 200 and Lo! &as boug#! $or *20,000 n 200. 9omer 9ea"!y resubd'ded resubd'ded !#e !&o "o!s and made a 00 sD.m. "o! ou! o$ !#e orgna" orgna" !&o "o!s by !a:ng 200 sD. m. $rom ea%# !o ma:e Lo! C. T#e %os! o$ Lo! C &as by a""o%atng a porton o$ !#e %os! o$ !#e orgna" !&o "o!s. 9omer 9ea"!y bu"d a #ouse on Lo! C a! a %os! o$ *1+2,000. I! &as %omp"%a!ed on June 0, 200( and #ad an estma!ed use$u" "$e o$ 20 years. T#e !#ree !#ree "o!s and #ouse &ere so"d durng 200( on !#e $o""o&ng !erms6 8a!e Sa"es Lo! o$ Sa"e pr%e Lo! A. Mar. Mar. 1 *171,2( Lo! . . B%!. 1 20,000 Lo! C Q =ouse.. =ouse.. June 0 20,000
8o&n *aymen! a"an%e *+1,2( *120,000 (0,000 1-0,000 1(0,000 20,000
a"an%e, *ayab"e EDua" ns!a""men! Lo! A. *12,000 e'ery mon!#s Lo! . *20,000 e'ery 2 mon!#s Lo! C Q =ouse.. *0,000 e'ery - mon!#s Ins!a""men! paymen! s !o be app"ed /rs! !o a%%rued n!eres! and !#e ba"an%e !o a redu%ton o$ prn%pa". T#e ra!e o$ n!eres! s 10 p.a. on !#e %arryng ba"an%e o$ !#e prn%pa". Aer repea!ed demand $rom !#e buyer o$ Lo! C and #ouse, #e $a"ed !o mee! !#e ns!a""men! 8ue on June 0,2003, and !#e proper!y &as repossessed. repossessed. T#e rea"ed rea"ed gross pro/! $rom !#e sa"e sa"e o$ !#e "o!s and #ouse on 8e%ember 8e%ember 1, 1, 200( are6 Lo! A a. *2,7. b. *2,. %. *2,72.+( d. *2,7.
Lo! *2+,. *2,+. *2,. *2+,.
Lo! C Q =ouse *7(,00 *(-,700 *(,200 *(-,+00
To!a" *127.--.-*1+,+--.-*11,2-+.31 *1-,+--.--
++. Jade Co. #as been usng !#e %as# me!#od !o a%%oun! $or n%ome sn%e !s /rs! year o$ operaton operaton n 2007. A"" sa"es made on %red! &!# no!es re%e'ab"e g'en by %us!omers. T#e ba"an%es due on !#e no!es, a! !#e end o$ ea%# year, &ere as $o""o&s? 2007 200( No!es re%e'ab"e 2007 *10(,000 *72,000 No!es re%e'ab"e 200( 120,000 R 8s%oun! on no!es re%e'ab"e 2007. 2007. 1,000 12,000 R 8s%oun! on no!es re%e'ab"e 200(. 200(. 1-,000
R8s%oun! R8s%oun! on no!es re%e'ab"e s popu"ar"y :no&n as unearned n!eres! n%ome. T#e n%ome s!a!emen!s $or !#e years 2007 and 200( n%"uded !#e $o""o&ng amoun!s? 2007 9e'enue %o""e%tons on prn%pa".... prn%pa".... *-,000 9e'enue ) n!eres!. 7,000 Cos! o$ goods pur%#asedR.. 100,000
200( *100,000 11,000 10+,2+0
RIn%"udes n%rease n n'en!ory) *10,000 IN 2007 Q *1-,000 IN 200(. Compu!e !#e rea"ed gross pro/! $or !#e year 415 2007, and 425 200( assumng !#e use o$ Ins!a""men! me!#od o$ a%%ountng6 a. 415 *27,200? 425 *+,(00 b. 415 2,13? 425 *7,7(
%. 415 *27,200? 425 *7,7( d. 415 2,13? 425 +,(00
+-. T#e Ara Mo!ors Company ma:es ma:es a"" sa"es on ns!a""men! %on!ra%!s and a%%ordng"y repor!s n%ome on !#e ns!a""men! bass. Ins!a""men! %on!ra%!s re%e'ab"es are a%%oun!ed $or by years. 8e$au"!ed %on!ra%!s are re%orded by debtng Loss on 9epossesson a%%oun! and %redtng !#e appropra!e Ins!a""men! Con!ra%! 9e%e'ab"e a%%oun! $or !#e unpad ba"an%e a! !#e tme o$ de$au"!. A"" repossessons repossess ons and !rade)ns are re%orded a! rea"ab"e 'a"ues. T#e $o""o&ng da!a re"a!e !o !#e !ransa%tons durng 2007 and 200(.
2007 *1+0,000 *13(,+00
Ins!a""men! sa"es.. Ins!a""men! %on!ra%! re%e'ab"e.121 2007 sa"es . . (0,000 200( sa"es . *ur%#ases. 100,000 Ne& mer%#andse n'en!ory, 121 a! %os! Loss on repossessons.. repossess ons..
200(
2+,000 3+,000 120,000 10,000 2-,000 -,000
T#e %ompany aud!or ds%"osed !#a! !#e n'en!ory !a:en on 8e%ember 1, 200( dd no! In%"ude %er!an mer%#andse re%e'ed as !rade)n on 8e%ember 2, 200( $or &#%# an a""o&an%e &as g'en. T#e apprased 'a"ue o$ mer%#andse s *1,+00 &#%# &as a"so !#e a""o&an%e on !#e !rade)n . No en!ry &as made !o re%ord !#s mer%#andse on !#e boo:s a! !#e tme ! &as re%e'ed . In 2007, a 200( %on!ra%! &as de$au"!ed and !#e mer%#andse &as repossessed. repossesse d. A! !#e tme o$ de$au"!, !#e repossessed mer%#andse #ad an apprased 'a"ue o$ *2,+00. T#e repossessed mer%#andse mer%#andse &as ne!#er re%orded nor n%"uded n !#e p#ys%a" In'en!ory In'en!ory on 8e%ember 1, 200(. Compu!e !#e 415 !o!a" rea"ed gross pro/! on sa"es n 200( and 425 gan 4"oss5 on
repossesson. a. b.
415 *70,000? 425 * 100 415 70,000? 425 41,1005
%. 415 *+0,00? 425 *41,1005 d. 415 13,-00? 425 ,+00
+7. Bn January 1, 2007 "ue Company %ommen%ed !s sa"es o$ gas gas s!o'es. Separa!e a%%oun!s &ere se! up $or ns!a""men! and %as# sa"es, bu! perpe!ua" n'en!ory re%ord &as no! :ep!. Bn !#e ns!a""men! sa"es a do&n paymen! o$ 1 &as reDured, &!# !#e ba"an%e paymen! n 1( eDua" mon!#"y ns!a""men!s. T#e %ompany ad>us!ed !s re%ords a! !#e end o$ ea%# year !o !#e ns!a""men! ns!a""me n! bass by use o$ a de$erred gross pro/! a%%oun!. #en %on!ra%!s &ere de$au"!ed !#e unpad ba"an%e &ere %#arged %#arged !o a bad deb!s e@pense a%%oun!, a%%oun!, and sa"es o$ repossessed mer%#andse &ere %red!ed !o !#s a%%oun!. A! !#e end o$ !#e year !#e e@pense a%%oun! &as ad>us!ed !o reUe%! !#e a%!ua" "oss. T#e !ransa%tons o$ !#e "ue Company are as $o""o&s6
Sa"es6 2007 200( Ne& gas s!o'es $or %as# . *27,000 * 7,000 Ne& gas s!o'es on ns!a""men! 4n%"udng !#e 1 %as# do&n paymen!5 2+,000 0,000 9epos 9eposses sessed sed gas gas s!o' s!o'e e . . 7+0 (7+ *ur%#ases. 13,000 21+,000 *#ys%a" n'en!ores a! 8e%ember 16 Ne& gas s!o'es a! %os! +,+00 -00,000 9epossessons 9epossess ons a! apprased 'a"ue 1(0 200
%. 415 *22,0(7? 425 *11,+00 d. 415 22,0(7? 425 11,((0
+(. T#e !ra" ba"an%e o$ 8umague!e App"an%e Corporaton Corporaton as o$ !#e end o$ !#e /s%a" year on Sep!ember 0, 200( s6 8eb!
Cred!
A%%oun!s re%e'ab"e. re%e'ab"e . *100,000 A%%oun!s payab"e. *100,000 A""o&an%e $or depre%aton. ,7+0 Cap!a" s!o%: 12+,000 Cas# .... -,2+0 8e$erred gross pro/!)2007 +0,000 EDupmen!. 112,+00 Ins!a""men! %on!ra%! re%e'ab"e)2007 re%e'ab"e) 2007 12,+00 Ins!a""men! %on!ra%! re%e'ab"e)200( re%e'ab"e) 200( 1+0,000 Ins!a""men! sa"es 7+,000 In'en!ory, Sep!. 0, 2007.. -2,+00 Loss on repossessons repossess ons ,7+0 *repad e@penses ,7+0 *ur%#ases +,000 9epossessons 2,+00 9e!aned earnngs.. earnngs .. 0,000 Sa"es.. 12,+00 Se""ng Se""n g and admns!rat'e e@penses. 37,+00 To!a". *1,02-,2+0 *1,02-, 2+0 *1,02-,2+0 *1,02-,2 +0 T#e po3s!)%"osng !ra" ba"an%e on Sep!. 0, 2007 s#o&s !#e $o""o&ng ba"an%es o$ %er!an a%%oun!s6 Ins!a""men! %on!ra%! re%e'ab"e )2007.......... )2007......... . *100,000 8e$erred gross pro/!)2007 +0,000 T#e gross pro/! per%en!age per%en!age on regu"ar sa"es durng !#e year &as 0. T#e a%%oun!an! made !#e $o""o&ng en!ry $or a repossesson on a sa"e o$ 2007 !o&ards !#e end o$ /s%a" year6 9epossessons 9epossesso ns *2,+00 Loss on repossessons... repossess ons... ,7+0 Ins!a""men! %on!ra%! re%e'ab"e)2007 re%e'ab"e) 2007
*-,2+0
T#e n'en!ory n'en!ory o$ ne& and repossessed repossessed mer%#andse mer%#andse on Sep!. Sep!. 0, 200( amoun!ed amoun!ed !o *7+,000. T#e !o!a" !o!a" rea"ed gross pro/! $or !#e /s%a" year Sep!ember 0, 200(. a. *11,(7+ b. 101,2+0
%. *3,7+0 d. 2+,-2+
+3.
8e$e 8e$err rred ed gross gross pro/! pro/! 2007 2007 .. .. ,12+ ,12+ Loss repossesson.. repossesso n.. ,12+ b. 8e$erred 8e$erred gross gross pro/!) pro/!) 2007 2007 ,7+0 Loss on repossesson.. repossess on.. ,7+0
%.
Loss Loss on repos reposses sesso son n .. .. ,12+ ,12+ Ins!a""men! Ins!a""me n! %on!ra%! re%Gb"e) 2007 d. No en!r en!ry y ne%e ne%ess ssar ary y
,12+
-0.
%. *2+,-2+ d. 17,+00
