own payment: 20% nstallment sales: P545, 000 in 2020, P785,000 in 2021, and P968,000 in 2022 Markup on cost: 35% Collections after down payment: 40% during year of sale, 35% during the year aft ow much is the realized gross profit for year 2020?

own payment: 20% nstallment sales: P545, 000 in 2020, P785,000 in 2021, and P968,000 in 2022 Markup on cost: 35% Collections after down payment: 40% during year of sale, 35% during the year aft ow much is the realized gross profit for year 2020?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.

Question

The
following information pertain to installment sales of Lapillus Variety Store:
• Down payment: 20%
• Installment sales: P545, 000 in 2020, P785,000 in 2021, and P968,000 in 2022
• Markup on cost: 35%
• Collections after down payment: 40% during year of sale, 35% during the year after sale, and 25% on the third year.
How much is the realized gross profit for year 2020?

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