Question:
[This is a variation of Exercise 5–3 focusing on journal entries.]
Charter Corporation, which began business in 2013, appropriately uses the installment sales method of
accounting for its installment sales. The following data were obtained for sales during 2013 and 2014:
Required:
Prepare summary journal entries for 2013 and 2014 to account for the installment sales and cash
collections. The company uses the perpetual inventory system.
Answer:
2013
Installment receivables.......................................................................... 360,000
Inventory.......................................................................................... 234,000
Deferred gross profit......................................................................... 126,000
To record installment sales
2013
Cash....................................................................................................... 150,000
Installment receivables..................................................................... 150,000
To record cash collections from installment sales
[This is a variation of Exercise 5–3 focusing on journal entries.]
Charter Corporation, which began business in 2013, appropriately uses the installment sales method of
accounting for its installment sales. The following data were obtained for sales during 2013 and 2014:
Required:
Prepare summary journal entries for 2013 and 2014 to account for the installment sales and cash
collections. The company uses the perpetual inventory system.
Answer:
2013
Installment receivables.......................................................................... 360,000
Inventory.......................................................................................... 234,000
Deferred gross profit......................................................................... 126,000
To record installment sales
2013
Cash....................................................................................................... 150,000
Installment receivables..................................................................... 150,000
To record cash collections from installment sales
