On September 1, Year 1, Lewis Company sells inventory costing $133,515 for $310,500. The sales agreement...

Transcribed Image Text:

On September 1, Year 1, Lewis Company sells inventory costing $133,515 for $310,500. The sales agreement states that the buyer will pay $27,000 down and 21 equal monthly installment payments, with the first payment beginning on October 1, Year 1. Required: Compute the amount of gross profit to be recognized for each of the three years. Note: Assume that since collection is not assured (significant uncertainty), the company has decided to use the installment sales method of recognizing revenue. Year 1: Year 2: Year 3 : On September 1, Year 1, Lewis Company sells inventory costing $133,515 for $310,500. The sales agreement states that the buyer will pay $27,000 down and 21 equal monthly installment payments, with the first payment beginning on October 1, Year 1. Required: Compute the amount of gross profit to be recognized for each of the three years. Note: Assume that since collection is not assured (significant uncertainty), the company has decided to use the installment sales method of recognizing revenue. Year 1: Year 2: Year 3 :

Answer rating: 100% (QA)

Okay lets calculate the gross profit to be recognized for each of t... View the full answer