installment sales question

[blue sun]

MN company sells all merchandise on the installment basis. Condensed income statement and the amount collected from customer of each of the first year operation.
sales 270000
cost of mer.sold 162000
gross profit 108000
operating expense 50000
net income 22000
collection from sales of 90000
1st year.
REQUIRED
Determine the net income that would have been reported. if the installment method of recognizing revenue had been employed.

plz solve this problem.

[Information Consultant]

Instalment sales 270000
Cost of Instalment 162000
Defered Gross Profit 108000

Percentage 108000/270000=40 %

Cash Collection 90000
Realized Gross Profit 90000*40/100 -36000

Less Expense 50000
Net loss (14000)

[blue sun]

thanks

[blue sun]

sales july1 Rs120000
cost of installment sale 96000
down payment 30000
and monthly installment 15000 plus 12% per annum.on 1st AUGUST and the first day of next three month.machine was repossessed on dec 20 and market value Rs 21000.


find out repossessed value and tell me the method of interest apply on machine.

[wmahmooood]

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