Question: (Gross Profit Calculations and Repossessed Merchandise) Basler Corporation, which began business on January 1, 2014, appropriately uses the installment-sales method of accounting. The following data were obtained for the years 2014 and 2015.
(a) Compute the balance in the deferred gross profit accounts on December 31, 2014, and on December 31, 2015.
(b) A 2014 sale resulted in default in 2016. At the date of default, the balance on the installment receivable was $12,000, and the repossessed merchandise had a fair value of $8,000. Prepare the entry to record the repossession.