Gross Profit Calculations and Repossessed Merchandise Basler Corporation, which began business on January 1, 2010, appropriately uses the installment-sales method of accounting. The following data were obtained for the years 2010 and 2011.

(a) Compute the balance in the deferred gross profit accounts on December 31, 2010, and on December 31, 2011.

(b) A 2010 sale resulted in default in 2012. At the date of default, the balance on the installment receivable was $12,000, and the repossessed merchandise had a fair value of $8,000. Prepare the entry to record the repossession.

(AICPA adapted)

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2010 2011 Installment sales Cost of installment sales General & administrative expenses Cash collections on sales of 2010 $750,000 510,000 $840,000 84,000 310,000 400,000 -0-