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Question: Ajax Company appropriately accounts for certain sales using the installment sales method. The perpetual inventory system is used. Information related to installment sales for 2016 and 2017 is as follows: Cost of Sales Customer collections sales 2016 $300,000 $180,000 2017 $400,000 $280,000 on (year) sales 120,000, 100,000 150,000 Required: Calculate the amount of gross profit that would be recognized each year from installment sales. Prepare all necessary journal entries for each year. Repeat requirements 1 and 2 assuming that Ajax uses the cost recovery method to account for its installment sales.

Question: Ajax Company appropriately accounts for certain sales using the installment sales method. The perpetual inventory system is used. Information related to installment sales for 2016 and 2017 is as follows: Cost of Sales Customer collections sales 2016 $300,000 $180,000 2017 $400,000 $280,000 on (year) sales 120,000, 100,000 150,000 Required: Calculate the amount of gross profit that would be recognized each year from installment sales. Prepare all necessary journal entries for each year. Repeat requirements 1 and 2 assuming that Ajax uses the cost recovery method to account for its installment sales.

FINANCIAL ACCOUNTING
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: Ajax Company appropriately accounts for certain sales using the installment sales method. The perpetual inventory system is used. Information related to installment sales for 2016 and 2017 is as follows: Cost of Sales Customer collections sales 2016 $300,000 $180,000 2017 $400,000 $280,000 on (year) sales 120,000, 100,000 150,000 Required: Calculate the amount of gross profit that would be recognized each year from installment sales. Prepare all necessary journal entries for each year. Repeat requirements 1 and 2 assuming that Ajax uses the cost recovery method to account for its installment sales.
Transcribed Image Text:Question: Ajax Company appropriately accounts for certain sales using the installment sales method. The perpetual inventory system is used. Information related to installment sales for 2016 and 2017 is as follows: Cost of Sales Customer collections sales 2016 $300,000 $180,000 2017 $400,000 $280,000 on (year) sales 120,000, 100,000 150,000 Required: Calculate the amount of gross profit that would be recognized each year from installment sales. Prepare all necessary journal entries for each year. Repeat requirements 1 and 2 assuming that Ajax uses the cost recovery method to account for its installment sales.
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