Sales Under the Installment Method The following information is available for the Dassler Company, which began its operations in 2007:
1. Installment method sales
|
1. Installment method sales |
|
|
2007 |
$520,000 |
|
2008 |
600,000 |
|
2. Gross profit percentage |
|
|
2007 |
20% |
|
2008 |
24% |
|
3. Cash collections on installment method sales |
|
|
2007 |
25% of 2007 sales |
|
2008 |
55% of 2007 sales |
|
30% of 2008 sales |
|
|
4. Bad debt policy |
|
The company estimates its bad debts to be 2% of installment method sales. |
|
5. Defaults and repossessions |
|
|
2007 |
$10,000 of 2007 installment method sales, of which $1,000 had been collected |
|
2008 |
$20,000 of 2007 installment method sales, of which $4,000 had been collected |
|
$15,000 of 2008 installment method sales, of which $2,000 had been collected |
|
The policy of the company is to value repossessed items at 40% of their original selling price.
Required
Prepare the journal entries for 2007 and 2008.