Question: Luge Co., which began operations on January 2, 2010, appropriately uses the installment sales method of accounting. The following information is available for 2011: Installment

Luge Co., which began operations on January 2, 2010, appropriately uses the installment sales method of accounting.

The following information is available for 2011:

Installment accounts receivable, December 31, 2011 $800,000 Deferred gross profit, December 31, 2011 (before recognition of realized gross profit for 2011) 560,000 Gross profit on sales 40%

For the year ended December 31, 2011, cash collections and realized gross profit on sales should be Cash collections Realized gross profit

a. $400,000 $320,000

b. $400,000 $240,000

c. $600,000 $320,000

d. $600,000 $240,000

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