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nishvik
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Location: United States
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| Posted: 23 Jun 2012 at 18:10 | IP Logged
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Please if anyone can explain this one...
Dolce which began its operations on jan1,yr1
appropriately uses Installment method of accounting to
record revenue. Following info is available
Sales
Year1 & nbsp; Y ear 2 ; ; ; ; ; ;
1000,000 &nbs p; 2000,000
GP realized on sales
Year 1 ; Year2
150,000 ; 90,000
- ; 200,000
Gp percentage &n bsp; &n bsp; &n bsp; &n bsp; &n bsp;
30% &nb sp; 40%
What amount of Installment sales receivable amount should
Dolce report in December 31,yr 2 balance sheet
a.1225,000
b.1300,000
c.1700,000
d.1775,000
Correct choice is answer c
Pease if anyone can explain this one...
__________________
Thank you
Nishvik
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astone
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| Posted: 24 Jun 2012 at 18:27 | IP Logged
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YR 1 |
YR 2 |
| COS |
700,000 |
1,200,000 |
| Profit |
300,000 |
800,000 |
| Total Sales |
1,000,000 |
2,000,000 |
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| Collections |
150,000 |
290,000 |
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| GP % Collected |
150,000/300,000 = 50% |
290,000/800,000 = 36% |
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| Reduce A/R by GP % Collected |
50% |
36% |
| A/R |
1,000,000 |
2,000,000 |
| A/R % Collected |
(500,000) |
(720,000) |
| Total in A/R 12.31.02 |
500,000 |
+ ; 1,280,000 |
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nishvik
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Posts: 56
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| Posted: 25 Jun 2012 at 12:36 | IP Logged
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Hey Astone,
Thanx for replying back and for workin out with the
solution ..
I think for yr1 GP realized you have applied the GP rate
of Yr2...Bcz I see your answer is differnt
Actually I tried to work on it and came up with this
solution..
Gp realized=Cash collections *GP %
So year 1
GP realized is 150,000 and GP % is 30%
So Cash collections is (150,000*100)/30=500,000
In Yr2
Collections from Yr1 (90000*100)/30=300,000
Collections frm Yr2(200,000*100)/40=500,000
So ,
Accounts receivable Yr1= Sales -Cash collection
Yr1=1,000,000-500,000=500,000
Accounts Receivable in Yr2=Sales -Cash collection
Yr2=2,000,000-(300,000+500,000)=1,200,000
So total Account receivable is 1,200,000+500,000
So its 1,700,000 Correct answer
__________________
Thank you
Nishvik
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Topic: Becker f-2 CPA-00834 Installment acc
Topic Closed)
