How do you calculate gross profit in the installment sales method
Kathleen Stege
Intermediate Accounting I: Fall 2011
Chapter 5 homework
Instructions | help
2.
Value:
2 points
Exercise 5-2 Installment sales method [LO2]
Charter Corporation, which began business in 2011, appropriately uses the installment sales method of accounting for its installment sales. The following data were obtained for sales made during 2011 and 2012:
2011
2012
Installment sales
$
360,000
$
350,000
Cost of installment sales
234,000
245,000
Cash collections on installment sales during:
2011
150,000
100,000
2012
?
120,000
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Required:
(1)
How much gross profit should Charter recognize in 2011 and 2012 from installment sales? (Do not round intermediate calculations. Omit the "$" sign in your response.)
Gross Profit
2011
$
2012
$
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(2)
What should be the balance in the deferred gross profit account at the end of 2011 and 2012? (Do not round intermediate calculations. Omit the "$" sign in your response.)
2011
2012
Balance in deferred gross profit account
$
$
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