(Analysis of Installment Sales Accounts) Samuels Co. appropriately uses the installment sales method of accounting. On December 31, 2014, the books show balances as follows.
|
Installment Receivables |
Deferred Gross Profit |
Gross Profit on Sales |
|||
|
2012 |
$12,000 |
2012 |
$ 7,000 |
2012 |
35% |
|
2013 |
40,000 |
2013 |
26,000 |
2013 |
33% |
|
2014 |
80,000 |
2014 |
95,000 |
2014 |
32% |
Instructions
(a) Prepare the adjusting entry or entries required on December 31, 2014 to recognize 2014 realized gross profit. (Installment receivables have already been credited for cash receipts during 2014.)
(b) Compute the amount of cash collected in 2014 on accounts receivable from each year.