Question: (Installment-Sales Method and Cost-Recovery Method) On January 1, 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. Instructions
(a) Compute the amount of gross profit realized each year, assuming Wetzel uses the cost-recovery method.
(b) Compute the amount of gross profit realized each year, assuming Wetzel uses the installment-sales method.