FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
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Transcribed Image Text:Charter Corporation, which began business in 2016, appropriately uses the installment sales method of
accounting for its installment sales. The following data were obtained for sales made during 2016 and 2017:
Installment sales
Cost of installment sales
Cash collections on installment sales during:
2016
2017
Gross profit
2016
2016
$380,000
190,000
170,000
Required:
1. How much gross profit should Charter recognize in 2016 and 2017 from installment sales?
Balance in deferred gross profit account
2017
2017
$370,000
259,000
120,000
130,000
2. What should be the balance in the deferred gross profit account at the end of 2016 and 2017?
2016
2017
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