• 1 Dalol Company, which began operations on January 2, Year 4, appropriately uses the installment method of accounting. The following information is available for the year ended December 31, Year 4.

Gross profit on sales……………………………….……….40%

Deferred gross profit, Dec. 31, Year 4………………….Br. 240,000

Cash collected, including down payments…………………450,000

 What is the total amount of Dalol’s installment sales for the year ended December 31, Year 4?

1. Br. 600,000                 C. Br. 850,000
2. Br. 690,000                 D. Br. 1,050,000         E. Some other amount

• 2 For a retailing enterprise that appropriately uses the installment method of accounting for installment sales of merchandise, doubtful installment receivables expense is recognized when:

 A customer defaults on an installment contract.

 An estimate of doubtful installment receivables is made at the end of an accounting period.

There are uncollected deferred gross profits and carrying charges on an installment receivable.

 Reconditioning costs for repossessed merchandise are incurred.

• 3 An overallowance on a trade-in on an installment sale is debited to:
• Cost of installment sales.
• Overallowances on trade-ins expense.
• Inventories (trade-ins).
• None of the foregoing ledger accounts.
• 4 Oliver Co. uses the installment-sales method. When an account had a balance of $8,400, no further collections could be made and the dining room set was repossessed. At that time, it was estimated that the dining room set could be sold for Br2,400 as repossessed, or for Br3,000 if the company spent Br300 reconditioning it. The gross profit rate on this sale was 70%. The gain or loss on repossession was a:

Br5,880 loss.               B. Br6,000 loss.                      C. Br600 gain.             D.Br180 gain.

Answer rating: 100% (QA)

1 correct answer 600000 Explanation Deferred Gross Profit 240000 Gross profit on sales 4... View the full answer