Lindor Corporation, which began business in 2014, appropriately uses the install

Question

Lindor Corporation, which began business in 2014, appropriately uses the installment sales method of accounting for its installment sales. The following were obtained for sales made during 2015 and 2016. 2015 2016 Installment Sales Cost of Installment sales Gross Profit 580,000620,000 319,000 384 261,000 235,600 Cash collections on installments sales durin 2015 2016 232,000145,000 217,000 Required: How much gross profit should Charter recognize in 2015 and 2016 from installment sales? 1. hat should be the balance in the deferred gross profit account at the end of 2015 and 2016? 2. W

Explanation / Answer

1.

Gross profit in 2015 is 104,400

Gross profit in 2016 is 147,710

2.

2015 2016 Installment Sales    580,000    620,000 Cost of Installment sales    319,000    384,400 Gross Profit    261,000    235,600 Gross Profit percentage 45% 38% Cash collections in 2015    232,000 Gross profit 2015    104,400 Cash collections in 2016    145,000    217,000 Gross profit 2016      65,250      82,460

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