Question

In: Accounting

X Corporation appropriately uses the installment-sales method of accounting to recognize income in its financial statements....

X Corporation appropriately uses the installment-sales method of accounting to recognize income in its financial statements. The following information is available for 2020 and 2021.

2020

2021

Installment sales

$800,000

$1,000,000

Cost of installment sales

480,000

650,000

Cash collections on sales of 2020

300,000

500,000

Cash collections on sales of 2021

-0-

400,000

Compute the amount of realized gross profit recognized in each year.

2020

2021

Solutions

Expert Solution

Answer
CALCULATION OF THE GROSS PROFIT RECOGNIZED FOR 2020 and 2021
Year 2020 Year 2021
PARTICULARS   AMOUNT AMOUNT
Installment Sales $          800,000 $       1,000,000
Less: Cost of installment Sales   $          480,000 $          650,000
Gross Profit   $          320,000 $          350,000
Answer = Realized Gross profit recognize for the year 2020 = $          320,000
Answer = Realized Gross profit recognize for the year 2021 = $          350,000

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