Mantle Inc. sells merchandise for cash and also on the installment plan. Entries to record cost of goods sold are made at the end of each year.

   Repossessions of merchandise (sold in 2012) were made in 2013 and were recorded correctly as follows.

Deferred Gross Profit, 2012                             7,200
Repossessed Merchandise                                 8,000
Loss on Repossession                                        2,800
Installment Accounts Receivable, 2012                     18,000

Part of this repossessed merchandise was sold for cash during 2013, and the sale was recorded by a debit to Cash and a credit to Sales Revenue.

   The inventory of repossessed merchandise on hand December 31, 2013, is $4,000; of new merchandise, $127,400. There was no repossessed merchandise on hand January 1, 2013.

   Collections on accounts receivable during 2013 were:

Installment Accounts Receivable, 2012             $80,000
Installment Accounts Receivable, 2013                50,000

   The cost of the merchandise sold under the installment plan during 2013 was $111,600. The rate of gross profit on 2012 and on 2013 installment sales can be computed from the information given.

Instructions
  (a) From the trial balance and other information given above, prepare adjusting and closing entries as of December 31, 2013.
  (b) Prepare an income statement for the year ended December 31, 2013. Include only the realized gross profit in the income statement.