Installment-Sales-Default and Repossession
Response to the following problem:
Seaver Company uses the installment-sales method in accounting for its installment sales. On January 1, 2014, Seaver Company had an installment account receivable from Jan Noble with a balance of $1,800. During 2014, $500 was collected from Noble. When no further collection could be made, the merchandise sold to Noble was repossessed. The merchandise had a fair value of $650 after the company spent $60 for reconditioning of the merchandise. The merchandise was originally sold with a gross profit rate of 30%.
Instructions
Prepare the entries on the books of Seaver Company to record all transactions related to Noble during 2014. (Ignore interest charges.)