Maurice Tutor
$15/per page/Negotiable
(Installment-Sales Computations and Entries) Paul Dobson Stores sell appliances for cash and also on the installment plan. Entries to record cost of sales are made monthly.
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PAUL DOBSON STORES |
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| Â |
Dr. |
Cr. |
|
Cash |
$153,000 |
 |
|
Installment Accounts Receivable, 2012 |
56,000 |
 |
|
Installment Accounts Receivable, 2013 |
91,000 |
 |
|
Inventory—New Merchandise |
123,200 |
 |
|
Inventory—Repossessed Merchandise |
24,000 |
 |
|
Accounts Payable |
 |
$ 98,500 |
|
Deferred Gross Profit, 2012 |
 |
45,600 |
|
Capital Stock |
 |
170,000 |
|
Retained Earnings |
 |
93,900 |
|
Sales |
 |
343,000 |
|
Installment Sales |
 |
200,000 |
|
Cost of Goods Sold |
255,000 |
 |
|
Cost of Installment Sales |
120,000 |
 |
|
Loss on Repossession |
800 |
 |
|
Operating Expenses |
128,000 |
 |
| Â |
$951,000 |
$951,000 |
The accounting department has prepared the following analysis of cash receipts for the year.
|
Cash sales (including repossessed merchandise) |
$424,000 |
|
Installment accounts receivable, 2012 |
96,000 |
|
Installment accounts receivable, 2013 |
109,000 |
|
Other |
36,000 |
|
Total |
$665,000 |
Repossessions recorded during the year are summarized as follows.
| Â |
2012 |
|
Uncollected balance |
$8,000 |
|
Loss on repossession |
800 |
|
Repossessed merchandise |
4,800 |
Instructions
From the trial balance and accompanying information:
(a) Compute the rate of gross profit on installment sales for 2012 and 2013.
(b) Prepare closing entries as of December 31, 2013, under the installment-sales method of accounting.
(c) Prepare an income statement for the year ended December 31, 2013. Include only the realized gross profit in the income statement.