Sales Under the Installment Method The Dyson Company sells computer games to teenagers. Selected accounts included in the trial balance at December 31, 2007 and 2008 are as follows:
|
2006 |
2007 |
|
|
Installment accounts receivable, 2006 |
$80,000 |
$20,000 |
|
Installment accounts receivable, 2007 |
112,500 |
|
|
Allowance for doubtful installment accounts receivable, 2006 |
5,000 |
3,700 |
|
Allowance for doubtful installment accounts receivable, 2007 |
7,000 |
|
|
Deferred gross profit, 2006 |
16,000 |
3,500 |
|
Deferred gross profit, 2007 |
22,500 |
During 2007 installment method sales and cost of goods sold were $200,000 and $160,000, respectively. In 2007 the company repossessed games that had been sold in 2006 for $6,000 and on which $2,500 had been collected. The games were believed to be worth $1,000. No repossessions occurred on 2007 sales.
Required
Prepare summary journal entries for 2007.