Mandarin Partners appropriately uses the instalment-sales method of accounting to recognize income in its financial statements. The following information is available for 2014 and 2015.
2014 2015 Instalment sales $300,000 $750,000
Cost of instalment sales 255,000 660,000
Cash collections on 2014 sales 70,000 201,000
Cash collections on 2015 sales –0– 216,000
Instructions (a) Compute the amount of realized gross profit recognized in each year. (b) Prepare all journal entries required in 2015