Houser Appliances accounts for all sales of its merchandise on the installment basis. Following is the unadjusted trial balance at 12/31/12.
Cash $45,000
Installment accounts receivable-2010 20,000
Installment accounts receivable-2011 50,000
Installment accounts receivable-2012 90,000
Inventory 27,400
Repossessed merchandise 4,600
Accounts payable $ 37,600
Deferred gross profit-2010 12,000
Deferred gross profit-2011 26,400
Common stock 125,000
Retained earnings 10,000
Installment sales 120,000
Cost of installment sales 78,000
Loss on repossessions 3,000
Operating expenses 13,000
$331,000 $331,000
Additional information:
2010 gross profit rate: 25%
Total cash receipts during 2012: $118,000
Merchandise sold in 2011 was repossessed in 2012 and the following entry was prepared:
Deferred Gross Profit-2011 2,400
Repossessed Merchandise 4,600
Loss on Repossessions 3,000
Installment Accounts Receivable-2011 10,000
Instructions
(a) What is the gross profit rate for 2011? Show supporting computations.
(b) What is the gross profit rate for 2012? Show supporting computations.
(c) Of the total cash receipts in 2012, how much represents collections from installment sales of: (Show supporting computations.)
(1) 2010?
(2) 2011?
(3) 2012?
(d) What is the total realized gross profit in 2012? Show supporting computations.