Homework Help is Here – Start Your Trial Now!
Business
Accounting
Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the installment sales method for revenue recognition. In 2020, Lake began operations and sold jet skis with a total price of $1,170,000 that cost Lake $585,000. Lake collected $390,000 in 2020, $390,000 in 2021, and $390,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,890,000 that cost Lake $1,134,000. Lake collected $630,000 in 2021, $495,000 in 2022, and $495,000 in 2023 associated with those sales. In 2023, Lake also repossessed $270,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $101,250 at the time they were repossessed. In its December 31, 2021, balance sheet, Lake would report: Multiple Choice Deferred gross profit of $600,000. Deferred gross profit of $1,305,000. Installment receivables (net) of $1,170,000.

Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the installment sales method for revenue recognition. In 2020, Lake began operations and sold jet skis with a total price of $1,170,000 that cost Lake $585,000. Lake collected $390,000 in 2020, $390,000 in 2021, and $390,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,890,000 that cost Lake $1,134,000. Lake collected $630,000 in 2021, $495,000 in 2022, and $495,000 in 2023 associated with those sales. In 2023, Lake also repossessed $270,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $101,250 at the time they were repossessed. In its December 31, 2021, balance sheet, Lake would report: Multiple Choice Deferred gross profit of $600,000. Deferred gross profit of $1,305,000. Installment receivables (net) of $1,170,000.

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter17: Advanced Issues In Revenue Recognition
Section: Chapter Questions
Problem 6MC
See similar textbooks
icon
Related questions
Question
Please help me
Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the installment sales method for revenue recognition. In 2020, Lake began operations and sold jet skis with a total price of $1,170,000 that cost Lake $585,000. Lake collected $390,000 in 2020, $390,000 in 2021, and $390,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,890,000 that cost Lake $1,134,000. Lake collected $630,000 in 2021, $495,000 in 2022, and $495,000 in 2023 associated with those sales. In 2023, Lake also repossessed $270,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $101,250 at the time they were repossessed. In its December 31, 2021, balance sheet, Lake would report: Multiple Choice Deferred gross profit of $600,000. Deferred gross profit of $1,305,000. Installment receivables (net) of $1,170,000.
Transcribed Image Text:Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the installment sales method for revenue recognition. In 2020, Lake began operations and sold jet skis with a total price of $1,170,000 that cost Lake $585,000. Lake collected $390,000 in 2020, $390,000 in 2021, and $390,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,890,000 that cost Lake $1,134,000. Lake collected $630,000 in 2021, $495,000 in 2022, and $495,000 in 2023 associated with those sales. In 2023, Lake also repossessed $270,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $101,250 at the time they were repossessed. In its December 31, 2021, balance sheet, Lake would report: Multiple Choice Deferred gross profit of $600,000. Deferred gross profit of $1,305,000. Installment receivables (net) of $1,170,000.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Market Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
SEE MORE TEXTBOOKS