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Ajax Company appropriately accounts for certain sales using the installment sales method. The perpetual inventory system is used. Information related to installment sales for 2013 and 2014 is as follows: 2013 2014 Sales $ 300,000 $ 400,000 Cost of sales 180.000 280,000 Customer collections on: 2013 sales 120,000 100,000 2014 sales 1150,000 Required:

1. Calculate the amount of gross profit that would be recognized each year from installment sales.

2.1Prepare all necessary journal entries for the year 2013. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

2.2Prepare all necessary journal entries for the year 2014. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.) Assume that Ajax uses the cost recovery method to account for its installment sales.

3.1 Compute the following: cash collection cost recovery gross profit 2013 sale 2013 sale 2014 sale 2014 total

3.2 Prepare all necessary journal entries for the year 2013. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

3.3 Prepare all necessary journal entries for the year 2014. (If no entry is required for a particular transaction, select "No journal entry required" in the first account field.)

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9954097

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