Charter Corporation, which began business in 2013, appropriately uses the installment sales method of accounting for its installment sales. The following data were obtained for sales during 2013 and 2014: 2013 2014 Installment sales $360,000 $350,000 Cost of installment sales 234,000 245,000 Cash collections on installment sales during: 2013 150,000 100,000 2014 120,000 Required: 1. How much gross profit should Charter recognize in 2013 and 2014 from installment sales? 2. What should be the balance in the deferred gross profit account at the end of 2013 and 2014?

Charter Corporation, which began business in 2013, appropriately uses the installment sales method of accounting for its installment sales. The following data were obtained for sales during 2013 and 2014:

	2013	2014
Installment sales	$360,000	$350,000
Cost of installment sales	234,000	245,000
Cash collections on installment sales during:
2013	150,000	100,000
2014		120,000

 

Required:

1.      How much gross profit should Charter recognize in 2013 and 2014 from installment sales?

2.      What should be the balance in the deferred gross profit account at the end of 2013 and 2014?

 

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