Chap005 - Student Name Instructor Class McGraw-Hill/Irwin...

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Student Name: Instructor Class: McGraw-Hill/Irwin Problem 05-02 Requirement 1: 2011 Cost recovery %: $180,000 $300,000 = 60% Gross profit % = 40% Correct! 2012 Cost recovery %: $280,000 $400,000 = 70% Gross profit % = 30% Correct! 2011 Gross Profit: Cash collection from 2011 sales = $120,000 X 40% = $48,000 Correct! 2012 Gross Profit: Cash collection from 2011 sales = $100,000 X 40% = $40,000 Cash collection from 2012 sales = $150,000 X 30% = 45,000 Total 2012 gross profit $85,000 Correct! Requirement 2: Date Account Debit Credit 2011 To record installment sales Installment receivables 300,000 Correct! Inventory 180,000 Deferred gross profit 120,000 2011 To record cash collections from installment sales Cash 120,000 Installment receivables 120,000 Correct! 2011 To recognize gross profit from installment sales Deferred gross profit 48,000 Realized gross profit 48,000 Correct! 2012 To record installment sales Installment receivables 400,000 Correct! Inventory 280,000 Deferred gross profit 120,000 2012 To record cash collections from installment sales Cash 250,000 Installment receivables 250,000 Correct! 2012 To recognize gross profit from installment sales Deferred gross profit 85,000 Realized gross profit 85,000 Correct!
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Requirement 3: Date Cash Collected Cost Recovery Gross Profit 2011 2011 sales $120,000 $120,000 0 Correct! 2012 2011 sales $100,000 $60,000 $40,000 2012 sales 150,000 150,000 0 2012 totals $250,000 $210,000 $40,000 Correct! Date Account Debit Credit 2011 To record installment sales Installment receivables 300,000 Correct! Inventory 180,000 Deferred gross profit 120,000 2011 To record cash collections from installment sales Cash 120,000 Installment receivables 120,000 Correct!
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