KC Music Corporation sells pipe organs on a deferred-payment plan. Summary information appears below:

Required:
1. Calculate the amount of gross profit that would be recognized each year under the installment sales method.
2. Calculate the amount of gross profit that would be recognized each year under the cost recoverymethod.

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2014 2015 $220,000 (165,000) 55,000 2016 Sales Cost of goods sold Gross profit Customer collections on: $160,000 (112,000) 48,000 $300,000 (219,000) $81,000 2014 sales 2015 sales 2016 sales S80,000 100,000 $ 20,000 80,000 140,000 60,000