Paul Dobson Stores sell appliances for cash and also on the installment plan. Entries to record cost

Question:

Paul Dobson Stores sell appliances for cash and also on the installment plan. Entries to record cost of sales are made monthly.

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.

                                                                        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.

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Related Book For  book-img-for-question

Intermediate Accounting

ISBN: 978-0470587287

14th Edition

Authors: kieso, weygandt and warfield.

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