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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