1. On January 2, 2021, Integrity Co. sold merchandise to Honesty, Inc. for P2,500,000. The cost of items to Integrity was P2,000,000. Honesty gave Integrity P500,000 cash and P2,000,000 note payable in 4 annual installments of P500,000 plus 12% interest. Honesty made the 1st principal and interest payment on December 31, 2021. Expenses related with the installment sale is P50,000.  
How much is the net income related with the sale on installment in 2021?

 

2. Integrity Company manufactures two products, Alpha and Beta from a joint process.  One production run costs P20,000 and results in 3,000 units of Alpha and 4,000 units of Beta.  Neither product is salable at split-off but must be processed further such that the separable cost for Alpha is P10 per unit and for Beta is P5 per unit.  The eventual market price for Alpha is P20 and for Beta, P10.  
If the company uses the constant gross margin approach in allocating joint cost to joint products, determine the total cost of product Alpha.

 

1. 3. Integrity, Inc., franchisor, entered into a franchise agreement with Honesty Company on July 1, 2022. The total franchise fees agreed upon is P750,000, of which P150,000 is payable upon signing and the balance is covered by a 10% note payable in four equal annual payments. The direct franchise cost incurred was P255,422. Indirect expenses of P42,500 was also paid. The franchise outlet commenced its operations on December 2, 2022 with total sales during the month of P250,000. The parties have further agreed that the franchisor will charge 5% on the franchisee's gross sales for continuing services rendered by the former.
2. How much is contract liability on July 1, 2022?

Answer rating: 100% (QA)

1 To calculate the net income related to the installment sale in 2021 we need to determine the total revenue and the total expenses for this transaction Total Revenue The total revenue from the sale o... View the full answer