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# Aguilar Corporation started operations on January 1, 2017 selling home appliances and furniture sets

both for cash and on instalment basis. Data on the instalment sales operations of the company gathered
for the years ending December 31, 2011 and 2012 were as follows:
2017 2018
Installment Sales 200,000 250,000
Cost of Installment Sales 120,000 175,000
Cash Collected on Installment Sales
2011 Installment Sales
2012 Installment Sales 105,000 75,000
150,000

Required:
Determine the Deferred Gross Profit and Realized Gross Profit on the sale at year-end of 2017 and
2018, respectively using the following assumptions:
a. The company is using profit realization method
b. The company is using cost recovery method
c. The company is using installment method

The Vetus Inc. sold a fitness equipment on instalment basis on October 1, 2011. The unit cost to the
company was 60,000 but the instalment selling price was set to 85,000. Terms of payment included the
acceptance of a used equipment given a trade-in value of 30,000. Cash of 5,000 was paid in addition to
the added trade-in equipment with the balance to be pain in ten (10) monthly instalments due at the
end of each month of sale. It would require 1,250 to recondition the used equipment so that it would be
resold for 25,000. A 15% gross profit rate was usual from the sale of used equipment. How much is the
the realized gross profit on 2011?

The Ducut Furniture Company appropriately used the instalment sales method in accounting for the
following instalment sale. During 2008, Molino sold furniture to an individual for 3,000 at a gross profit
of 1,200. On June 1, 2008, this instalment account receivable had a balance of 2,200 and it was
determined that no other collections would be made. Ducut, therefore, repossessed the merchandise.
When reacquired, the merchandise was appraised as being worth only for 1,000. In order to improve its
salability, Bengal incurred costs of 100 for reconditioning. Normal profit on resale is 200. How much is
the loss on repossession?

Bartolome Company sells appliances on the instalment basis. Below are the information for the past
three years:
2008 2007 2006
Installment Sales 750,000 600,000 400,000
Cost of IS 450,000 375,000 260,000
Collections on
2008 IS 275,000
2007 IS 180,000 240,000
2006 IS 125,000 120,000 150,000
Repossessions on defaulted accounts included one made on a 2008 sale for which the unpaid balance
amounted to 5,000. The FMV after incurring a reconditioning cost of 500 is 5,500.

Required:
a. Realized Gross Profit in 2008 on collections of 2008 installment sales
b. Deferred Gross Profit, end on December 2008 installment sales
c. Loss on Repossession