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    Full accrual method and the cost recovery method

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    Historically, 55% of sales are collected in the year of the sale, 30% in the following year, and 10% in the 3rd year.
    Assuming collections are as projected, give the journal entries for the years 2004-2007, assuming the cost recovery method.
    (Ignore provision for bad debts).
    Prepare a table comparing the gross profit recognized for 2004-2007 using the full accrual method and the cost recovery method.

    Sales Gross Profit Percentage
    2004 47,000 45%
    2005 45,000 42%
    2006 58,000 47%
    2007 61,000 49%
    Prepare a table comparing the gross profit recognized using the full accrual method and the cost recovery method.

    (See attached file for full problem description)

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    https://brainmass.com/business/cash-vs-accrual-accounting/63130

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    Historically, 55% of sales are collected in the year of the sale, 30% in the following year, and 10% in the 3rd year.
    Assuming collections are as projected, give the journal entries for the years 2004-2007, assuming the cost recovery method.
    (Ignore provision for bad debts).
    Prepare a table comparing the gross profit recognized for 2004-2007 using the full accrual method and the ...

    Solution Summary

    This provides the steps to compare the gross profit recognized using the full accrual method and the cost recovery method

    $2.19

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