Reference no: EM132739549
Rooster Co. uses the installment sales method. Relevant information follows:
20x1 20x2
Sales 300,000 480,000
Cost of sales 240,000 336,000
Installment receivable - 20x1 180,000 60,000
Installment receivable - 20x2 360,000
Rooster Co. repossessed a property that was sold in 20x1 for ?50,000. Total collections from this sale were ?24,000. Rooster Co. expects to resell the property for ?30,000 after reconditioning costs of ?4,000. The normal profit margin on resale of repossessed property is 30%.
Problem 1: How much is the profit recognized in 20x2
a. 54,800
b. 56,000
c. 51,000
d. 51,600
Problem 2: How much is the total realized gross profit in 20x2?
a. 53,200
b. 51,600
c. 54,800
d. 56,000
Problem 3: How much is the gain or loss on repossession?
a. 4,300
b. 3,200
c. 2,900
d. 3,800
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