Basler Corporation, which began business on January 1, 2014, appropriately uses the installment-sales method of accounting. The following data were obtained for the years 2014 and 2015.
________________________________2014 ___________2015
Installment sales ......................... $753,000 ........... $934,000
Cost of installment sales ................. 504,510 ............ 644,460
General & administrative expenses ...... 61,600 ............. 67,100
Cash collections on sales of 2014 ....... 275,000 ............ 301,000
Cash collections on sales of 2015 ............ -0- ............ 490,000
(a) Compute the balance in the deferred gross profit accounts on December 31, 2014, and on December 31, 2015.
(b) A 2014 sale resulted in default in 2016. At the date of default, the balance on the installment receivable was $15,400, and the repossessed merchandise had a fair value of $7,040. Prepare the entry to record the repossession.