Demolish Co. uses the “cost recovery method” (traditional accounting based on old US GAAP). The records of Demolish Co. show the following information: 20x120x2sales10,00015,000cost of sales8,0009,000cash collection: -from 20x1 sales7,0003,000-from 20x2 sales 12,000How much is the gross profit recognized by Demolish in 20x2?

Gross margin (gross profit): Gross margin is the amount of revenue earned from goods sold over the…

Answered: Demolish Co. uses the “cost recovery…

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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Demolish Co. uses the “cost recovery method” (traditional accounting based on old US GAAP). The records of Demolish Co. show the following information:

	20x1	20x2
sales	10,000	15,000
cost of sales	8,000	9,000
cash collection:
-from 20x1 sales	7,000	3,000
-from 20x2 sales		12,000

How much is the gross profit recognized by Demolish in 20x2?

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