Jackie Company uses installment sales method for their installment sales. On January 1, 2008, an equipment that cost P24,000 was sold for P40,000 to Mr. Charlie. Mr. Charlie made a down payment of P10,000 and paid P6,000 each for three months. When no further collection could be made, the equipment sold was repossessed. The estimated selling price was determined to be at P8,000 after the company spent P1,000 for reconditioning cost. A 25% gross profit was usual from the sale of used equipments. Determine the gain or loss on repossession.
Jackie Company uses installment sales method for their installment sales. On January 1, 2008, an equipment that cost P24,000 was sold for P40,000 to Mr. Charlie. Mr. Charlie made a down payment of P10,000 and paid P6,000 each for three months. When no further collection could be made, the equipment sold was repossessed. The estimated selling price was determined to be at P8,000 after the company spent P1,000 for reconditioning cost. A 25% gross profit was usual from the sale of used equipments. Determine the gain or loss on repossession.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jackie Company uses installment sales method for their installment sales. On January 1, 2008, an equipment that cost P24,000 was sold for P40,000 to Mr. Charlie. Mr. Charlie made a down payment of P10,000 and paid P6,000 each for three months. When no further collection could be made, the equipment sold was repossessed. The estimated selling price was determined to be at P8,000 after the company spent P1,000 for reconditioning cost. A 25% gross profit was usual from the sale of used equipments.
Determine the gain or loss on repossession.
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