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    almira garcia
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    1. The document provides the gross profit rates for 2018, 2019, and 2020 for a company. The rates were 40%, 42%, and 43% respectively. 2. It includes journal entries for 2020 transactions including sales, purchases, expenses, collections, and adjusting and closing entries. 3. A statement of comprehensive income for 2020 is prepared, excluding installment sales details which are provided in a separate schedule. It shows a net income of $143,400. 4. A statement of financial position as of December 31, 2020 is presented, showing total assets of $832,500 and equity of $700,600.

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    1. The document provides the gross profit rates for 2018, 2019, and 2020 for a company. The rates were 40%, 42%, and 43% respectively. 2. It includes journal entries for 2020 transactions including sales, purchases, expenses, collections, and adjusting and closing entries. 3. A statement of comprehensive income for 2020 is prepared, excluding installment sales details which are provided in a separate schedule. It shows a net income of $143,400. 4. A statement of financial position as of December 31, 2020 is presented, showing total assets of $832,500 and equity of $700,600.

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    © All Rights Reserved
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    20 views3 pages

    Assignment

    Uploaded by

    almira garcia
    1. The document provides the gross profit rates for 2018, 2019, and 2020 for a company. The rates were 40%, 42%, and 43% respectively. 2. It includes journal entries for 2020 transactions including sales, purchases, expenses, collections, and adjusting and closing entries. 3. A statement of comprehensive income for 2020 is prepared, excluding installment sales details which are provided in a separate schedule. It shows a net income of $143,400. 4. A statement of financial position as of December 31, 2020 is presented, showing total assets of $832,500 and equity of $700,600.

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    © All Rights Reserved
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    of 3

    1. Compute the gross profit rates of 2018,2019 and 2020.

    Deferred gross profit P24,000


    2018: GPR = ––––––––––––––––––––– = ––––––– = 40%
    Install. contracts rec. P60,000

    Deferred gross profit P58,800


    2019: GPR = ––––––––––––––––––––– = ––––––– = 42%
    Install. contracts rec. P140,000
    Gross profit
    (Install sales-Cost of IS) P86,000
    2020: GPR = –––––––––––––– = ––––––– = 43%
    Install. sales P200,000

    2. Prepare the journal entries for 2020 including the adjusting entries and closing entries at December
    31.
    Journal Entries
    Accounts Receivable 600,000
    Sales 600,000
    Install. Contracts Rec.-2020 200,000
    Install. Sales 200,000
    Purchases 476,000
    Cash 476,000
    Cost of installment Sales 114,000
    Shipments on Install. Sales 114,000
    Selling Expenses 210,000
    Cash 210,000
    Cash 790,000
    Accounts Receivable 560,000
    Install. Contracts Rec.-2018 40,000
    Install. Contracts Rec.-2019 80,000
    Install. Contracts Rec.-2020 110,000
    Adjusting Entries
    Installment Sales 200,000
    Cost of Installment Sales 114,000
    Deferred Gross Profit on Install. Sales 86,000
    Deferred Gross Profit – 2018 (40,000 x 40%) 16,000
    Deferred Gross Profit – 2019 (80,000 x 42%) 33,600
    Deferred Gross Profit – 2020 (110,000 x 43%) 47,300
    Realized Gross Profit 96,900
    Doubtful Accounts Exp. (1/4 x 1% x 600,000) 1,500
    Allowance for Doubtful Accounts 1,500
    Closing Entries
    Sales 600,000
    Merchandise Inventory, end 260,000
    Shipments on Installment Sales 114,000
    Merchandise Inventory, beg. 240,000
    Purchases 476,000
    Selling Expenses 210,000
    Doubtful Accounts Expense 1,500
    Income Summary 46,500
    Realized Gross profit 96,900
    Income Summary 96,900
    Income Summary 143,400
    Retained Earnings 143,400

    3. Prepare Statement of comprehensive Income not showing installment sales for 2020.

    Good Buy Mart


    Statement of Comprehensive Income
    December 31, 2020
    Sales 600,000
    Cost of sales:
    Merchandise inventory, Beg. 240,000
    Purchases 476,000
    Cost of goods available for sale 716,000
    Less: Shipments on installment sales 114,000
    Cost of goods available for regular sales 602,000
    Less: Merchandise inventory, end 260,000 342,000
    Gross profit on regular sales 258,000
    Add: Realized gross profit on installment sales (Sched. 1) 96,900
    Total realized gross profit 354,900
    Operating expenses:
    Selling expenses 210,000
    Doubtful accounts expense 1,500 211,500
    Net income 143,400

    Schedule 1:
    Years of Installment Sales
    2006 2007 2008 Total
    Collections 40,000 80,000 110,000
    Multiply by Gross profit rate 40% 42% 43%
    Realized gross profit on installment sales 16,000 33,600 47,300 96,900

    4. Prepare a statement of financial position as of December 31, 2020.


    Good Buy Mart
    Statement of Financial Position
    December 31, 2020
    ASSETS
    Cash 144,000
    Merchandise inventory 260,000
    Accounts receivable 62,000
    Allowance for doubtful accounts 3,500 58,500
    Installment contracts receivable – 2018 20,000
    Installment contracts receivable – 2019 60,000
    Installment contracts receivable – 2020 90,000
    Other assets 200,000
    Total Assets 832,500
    LIABILITIES AND EQUITY
    Liabilities
    Accounts payable 60,000
    Deferred gross profit on installment sales – 2018 8,000
    Deferred gross profit on installment sales – 2019 25,200
    Deferred gross profit on installment sales – 2020 38,700
    Total Liabilities 131,900
    Equity
    Capital stock 406,000
    Retained earnings 294,600 700,600
    Total Liabilities and Equity 832,500

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