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On December 15, 2009, Rigsby Sales Co. sold a tract of land that cost $3,600,000 for $4,500,000. Rigsby appropriately uses the installment sale method of accounting for this transaction. Terms called for a down payment of $500,000 with the balance in two equal annual installments payable on December 15, 2010, and December 15, 2011. Ignore interest charges. Rigsby has a December 31 year-end.

At December 31, 2010, Rigsby would report in its balance sheet:

A Realized gross profit of $500,000.

B Deferred gross profit of $400,000.

C Realized gross profit of $400,000.

D Cost of installment sales $1,600,000.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M975013

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