Answered: Addams, Inc. appropriately used

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Addams, Inc. appropriately used the installment method of accounting to recognize income in its financial statement. Some pertinent data relating to this method of accounting include: 2021 2022 Installment sales $750,000 $900,000 Cost of sales 450,000 630,000 Gross profit $300,000 $270,000 Collections during year: On 2021 sales 200,000 200,000 On 2022 sales 240,000 What amount of deferred gross profit should be reported on Addams’ income statement for 2021? a. $80,000 b. $100,000 c. $220,000 d. $300,000 What amount of realized gross profit should be reported on Addams’ income statement for 2022? a. $132,000 b. $152,000 c. $176,000 d. $216,000

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