Question - Use the following to answer questions
Coaster manufactures and sells logging equipment. Due to the nature of its business, Coaster is unable to reliably predict bad debts. During 2012, Coaster sold equipment costing $3,600,000 for $5,400,000. The terms of the sale were 20% down, with equal payments due quarterly over the next 3 years. All payments for 2012 were made on schedule. Round answers to two places.
(a) Assuming that Coaster uses the installment method of accounting for its installment sales, what amount of realized gross profit will Coastwe report in its income statement for the year ended December 31, 2012?
(b) Assuming that Coaster uses the cost recovery method of accounting for its installment sales, what amount of realized gross profit will Coaster report in its income statement for the year ended December 31, 2013?