Cash............................................................................................. 400
Installment Accounts Receivable................................... 400
(To record the collection of cash
on installment
accounts receivable)
Deferred
Gross Profit (40% X $400)........................................ 160
Realized Gross Profit........................................................ 160
(To recognize gross profit on
installment sale)
Repossessed
Merchandise................................................... 590
Deferred
Gross Profit (40% X $1,400)................................... 560
Loss
on Repossession........................................................... 250
Installment Accounts Receivable................................. 1,400
(To record default and repossession of
merchandise)
Repossessed
Merchandise................................................... 60
Cash.................................................................................... 60
(To record cash spent on reconditioning of
inventory)
='mso-tab-count:2'> ($600,000/$800,000) 75%
Total gross profit recognized 150,000
Less: Gross profit recognized in 2004 70,000
Gross profit recognized in 2005 $ 80,000
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