Summary Advanced Accounting: Installment Sales

Principal Collections:

1. Collection from Installment Sales Receivable (ISR)

ISR Beg xx
Installment Sales – Current Year xx
Recovery xx
Collections (xx)
Write-off (xx)
Repossessed Accounts (xx)
ISR End xx

2. Fair Value of Trade-in Merchandise

Selling Price xx
Under Allowance xx
Over Allowance (xx)
Adjusted Selling Price xx
Cost of Installment Sales (xx)
Gross Profit xx

Realized Gross Profit = Collections x Gross Profit Rate (GPR)

Deferred Gross Profit – Beg xx
Adjusted Deferred Gross Profit (xx)
Realized Gross Profit xx

Adjusted Deferred Gross Profit = ISR End x GPR

Alternative Computation for GPR:

1. Deferred Gross Profit – Beg / ISR Beg
2. Adjusted Deferred Gross Profit / ISR End

Market Value of Repossessed Merchandise xx
Unrecovered Cost (xx)
Gain/(Loss) on Repossession xx/(xx)

MV of Repossessed Merchandise (in order of priority):

1. Giver MV
2. Appraisal Value
3. Estimated Selling Price – Normal Profit – Reconditioning Cost