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Hinson 5-3 Installment Sales and Cost Recovery Methods

Hinson 5-3 Installment Sales and Cost Recovery Methods -...

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Student Name: Jamie Hinson Date: 4-Feb-08 Class: Intermediate Accounting I Assignment 5-3 Instal Problem 05-02 Requirement 1: 2006 Cost recovery %: $180,000 $300,000 = 60% Gross profit % = 40% 2007 Cost recovery %: $280,000 $400,000 = 70% Gross profit % = 30% 2006 Gross Profit: Cash collection from 2006 sales = $120,000 X 40% = $48,000 2007 Gross Profit: Cash collection from 2006 sales = $100,000 X 30% = $30,000 Cash collection from 2007 sales = $150,000 X 30% = 45,000 Total 2007 gross profit $75,000 Requirement 2: Date Account Debit Credit 2006 To record installment sales Installment receivables 300,000 Inventory 180,000 Deferred gross profit 120,000 2006 To record cash collections from installment sales Cash 120,000 Installment receivables 120,000 2006 To recognize gross profit from installment sales Deferred gross profit 48,000 Realized gross profit 48,000 2007 To record installment sales Installment receivables 400,000 Inventory 280,000 Deferred gross profit 120,000 2007 To record cash collections from installment sales Cash 250,000 Installment receivables
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Unformatted text preview: 250,000 2007 To recognize gross profit from installment sales Deferred gross profit 75,000 Realized gross profit 75,000 Requirement 3: Date Cash Collecte Cost Recovery Gross Profit 2006 2006 sales $120,000 $72,000 48,000 2007 2006 sales $100,000 $70,000 $30,000 2007 sales 150,000 105,000 45,000 2007 totals $250,000 $175,000 $75,000 Date Account Debit Credit 2006 To record installment sales Installment receivables 300,000 Inventory 180,000 Deferred gross profit 120,000 2006 To record cash collections from installment sales Cash 120,000 Installment receivables 120,000 2007 To record installment sales Installment receivables 400,000 Inventory 280,000 Deferred gross profit 120,000 2007 To record cash collections from installment sales Cash 250,000 Installment receivables 250,000 2007 To recognize gross profit from installment sales Deferred gross profit 75,000 Realized gross profit 75,000 llment Sales and Cost Recovery Methods it...
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