Since there is no reasonable basis for estimating the degree of collectibility, Astor Co. uses the installment method of revenue recognition for the following sales:
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2006 |
2005 |
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|
Sales |
$900,000 |
$600,000 |
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|
Collections from: |
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|
2005 sales |
100,000 |
200,000 |
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|
2006 sales |
300,000 |
— |
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|
Accounts written off: |
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|
2005 sales |
150,000 |
50,000 |
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|
2006 sales |
50,000 |
— |
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|
Gross profit percentage |
40 |
% |
30 |
% |
|
What amount should Astor report as deferred gross profit in its December 31, 2006 balance sheet for the 2005 and 2006 sales?
- $150,000
- $160,000
- $225,000
- $250,000