Determine the Bob deferred gross profit

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Problem - Kerry Corp purchased a used bottling machine from Bob's Bottling Inc. on Jan 1, 2015 for $900000. Bob accounted for the sale correctly under the installment sales method. It had a book value of $675000. Kerry paid with $300000 cash and a note for $600000 with an annual interest of 10%. Kerry agreed to make equal annual payments of $200000. Kerry Corp made their first payment on Jan 1, 2016 of $260000 which included interest of $60000 to date of payment.

Required - Determine the Bob deferred gross profit as of Dec 31, 2016?

A. 85,000

B. 100,000

C. 175,000

D. 160,000

Reference no: EM132454742

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