Problem - The following information was taken form the records of Locken Corporation for the years indicated. The company's year end is December 31.
2002 2003 2004
Sales (on installment) $450,000 $500,000 $620,000
Cost of Sales 342,000 360,000 434,000
Gross Profit 108,000 140,000 186,000
Cash Receipts:
2002 Sales $125,000 $280,000 $45,000
2003 Sales 210,000 230,000
2004 Sales 250,000
A. Calculate the amount of realized gross profit on installment sales and deferred gross profit to be reported in the year-end financial statements of Locken Corporation for the three years noted.
B. Prepare the journal entries for the years 2002 and 2003.