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Installment Sales

Installment Sales. Chapter 5 Allan R.Drebin. Installment sales. The installment method of accounting normally implies the deferral of gross profit but the recognition of selling and administrative expenses in the period of their incurrence. Sale of Real estate on Installment basis.

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Installment Sales

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  1. Installment Sales Chapter 5 Allan R.Drebin

  2. Installment sales • The installment method of accounting normally implies the deferral of gross profit but the recognition of selling and administrative expenses in the period of their incurrence.

  3. Sale of Real estate on Installment basis • Recognition of profit in period of sale • Recognition of profit periodically in Proportion to collections.

  4. Recognition Profit in period of sale • Pada saat Real estate dijual: Receivable from …XXX Real estate XXX Gain on sale XXX • Pada saat terima uang muka Cash XXX Mortgage Note XXX Receivable from … XXX

  5. Recognition of Profit in Period of sale • Pada saat bayar Biaya2 Penjualan Selling expenses XXX Cash XXX • To adjust accounts for Accrued Interest. Accrued Interest on Mortgage XXX Interest Income XX

  6. Recogniton of profit in period of sale • Menutup Nominal Accounts Gain on sale XXX Interest Income XXX Selling expenses XXX Income Summary XXX

  7. Recognition of Profit periodically in Proportion to collections • Pada saal jual Real Estate: Receivable from… XXX Real Estate XXX Deferred Gross ProfitXXX • Pada saat terima Down Payment: Cash XXX Mortgage Note XXX Receivable from… XXX

  8. Recognition of Profit periodically in Proportion to collections • Membayar biaya2 penjualan: Selling expenses XXX Cash XXX • To adjust accounts for Accrued Interest. Accrued Interest on Mortgage XXX Interest Income XX

  9. Recognition of Profit periodically in Proportion to collections • Pengakuan Laba kotor: Deferred Gross Profit XXX Realized Gross Profit XXX • Menutup Nominal Accounts: Realized GP XXX Interest Income XXX Selling expenses XXX Income Summary XXX

  10. Sale of merchandise on installment basis • Penjualan anggsuran: Installment contract Receivable XX Installment sales XX • Saat terima tagihan: Cash XXX Installment contract Receiv. XXX • To adjust and closing: Cost installment sales XXX Shipment on installment sales XXX

  11. Sale of merchandise on installment basis • To close installment sales and cost of installment sales: Installment sales XXX Cost of installment sales XXX Deferred GP XXX • Pengakuan GP setelah ada collection Deferred GP XXX Realized GP XXX

  12. Trade-Ins • The value of trade-in and the amount of the overallowance are calculated as follows: Amount allowed on trade-in XX Value of article traded in: Sale value of article XX Less:Reconditioning cost XX GP to be realized XXXXXX Overallowance XX

  13. Trade-Ins • Merchandise –Trade-ins XXX Overallowance on Inst.Sale XXX Installment Contracts Rec. XXX Insatllment sales XX Cost of installment sales XXX Merchandise-New XX

  14. Defaults and Repossession • Merchandise –Repossession XXX Deferred GP XXX Loss on Repossessions XXX Installment contrat Rec. XX

  15. Interest on installment Contracts • Periodic interest on balance of principal owed between installments • Periodic interest on installment due • Equal periodic payments that represent interest and principal • Periodic interest computed on original principal.

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