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E18-23B (Installment-Sales Method and Cost Recovery Method)Eagle Flyer Corp. operates on a calendar-year basis, and began making installment sales in 2014;the company usese the installment-sales method of profit recognition in accounting. The following d

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E18-23B (Installment-Sales Method and Cost Recovery Method)Eagle Flyer Corp. operates on a calendar-year basis, and began making installment sales in 2014, the company usese the installment-sales method of profit recognition in accounting. The following data were taken from the 2014 and 2015 records.;2014 2015;Installment sales $750,000 $1,350,000;Gross profit as a percent of costs 18% 20%;Cash collections on sales of 2014 $340,000 $340,000;Cash collections on sales of 2015 ?0? $580,000;The amounts given for cash collections exclude amounts collected for interest charges.;Instructions;(a) Compute the amount of realized gross profit to be recognized on the 2014 income statement, prepared using the installment-sales method.;(b) State where the balance of Deferred Gross Profit would be reported on the financial statements for 2015.;(c) Compute the amount of realized gross profit to be recognized on the 2015 income statement, prepared using the cost-recovery method.

 

Paper#75343 | Written in 18-Jul-2015

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