Determining Gross Profit Rate for Revenue Recognition
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Curiosity Company
Curiosity Company provided the following financial information for its installment-sales for the current year.
Financial Data:
Installment sales for current year $ 800,000
Cost of Goods Sold on installment basis $ 600,000
Payments by customers $ 320,000
Repossessed Merchandise - Unpaid balances $ 52,000
Repossessed Merchandise - Estimated Value $ 26,800
a) Prepare journal entries for the end of the year based on the information above.
b) Prepare the entry to record the gross profit realized in the current year.
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Solution Summary
This solution shows how to prepare the journal entries for the end of the year and to record gross profit realized in the current year for Curiosity Company.
Solution Preview
We would write the entries like this, using these accounts:
A/R - installment sales 800,000
Revenue 800,000
--
Cost of sales 600,000
Inventory 600,000
--
Cash 320,000
A/R ...
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