Installment Sales Notes
Installment Sales Notes
Installment Sales Notes
CONSIGNMENT
SALES
Revenue Recognition
INSTALLMENT SALES
is income that arises during ordinary
Revenue activities of an entity and is referred to by a
variety of different names including sales,
fees, interest, dividends and royalties.
Income
COGS xx COGS xx
Inventory xx Inventory xx
Sales xx
COGS xx
Deferred Gross Profit (DGP) xx
Cash xx Cash xx
Account Receivable xx Installment Account Receivable xx
DGP xx
Realized Gross Profit (RGP) xx
Sales – COGS = GP
GP/Sales = GPR
Gross Profit
Rate
DGP/IAR = GPR
The trial balance was prepared for WW Equipment, Inc., on December 2022 to reflect
the transactions transpired in 2022:
1. Calculate the gross profit percentage on IS
Debit Credit
for 2020, 2021, 2022 Cash 27,500.00
2020= 9,600/30,000 = 32% Installment Account Receivable, 2022 55,000.00
Installment Account Receivable, 2021 12,000.00
2021= 30% Installment Account Receivable, 2020 3,000.00
2022= 27.50% Account Receivable 17,000.00
Inventory, December 31 2021 52,000.00
2. Prepare a balance sheet and income statement Other Assets 40,000.00
Accounts Payable 40,000.00
AR DGP, 2021 45,000.00
30K DGP, 2020 9,600.00
Capital Stock 100,000.00
27K Retained Earnings 68,400.00
Sales 125,000.00
Installment Sales 320,000.00
Purchases 350,000.00
3K Cost of Installment Sales 232,000.00
Shipment on Installment Sales 232,000.00
Cost to sell
Normal profit
Accounting for repossessions is the determination of the fair market value at the date of repossession.
DGP, 2021 4,000 The inventory of new and repossessed merchandise on December 2022
DGP, 2020 3,600 was 35,000. The following account balances were reported in the post-
closing trial balance prepared on January 1, 2022.
Loss on Repossession 9,500
IAR, 2021 240,000
IAR, 2020 50,000
3. Prepare a balance sheet and income statement DGP, 2021 96,000
DGP, 2020 22,500
The trial balance was prepared for WW Equipment, Inc., on December 2022 to reflect
At the end of December, before preparing the trial the transactions transpired in 2022:
balance, the bookkeeper made the following Debit Credit