Sales Under the Installment Method
Response to the following problem:
The following information is available for the Butler Company in 2010, its first year of operations:
Total credit sales (including installment method sales) $205,000
Total cost of goods sold (including installment method cost of goods sold) 130,000
Installment method sales 65,000
Installment method cost of goods sold 39,000
Cash receipts on credit sales (including installment method sales of $20,000) 120,000
Required
1. Prepare the journal entries for 2010.
2. If the company collected $45,000 in 2011 on its 2010 installment method sales, prepare the appropriate journal entries in 2011.