Problem
On January 1st, 2014, Wetzel company sold property for $250,000. The note will be collected as follows $120,000 in 2014, $90,000 in 2015, and $40,000 in 2016. The property had cost Wetzel $150,000 when it was purchased in 2012.
a. Compute the amount of gross profit realized in 2014, 2015, and 2016, assuming Wetzel uses the cost recovery method.
b. Complete the amount of gross profit realized each year, assuming Wetzel uses the installment sales method.