(Installment Sales-Default and Repossession)
X-Run Inc. uses the installment-sales method in accounting for its installment sales. On January 1, 2014, X-Run had an installment account receivable from Herman Pringle with a balance of $3,900. During 2014, $700 was collected from Pringle. When no further collection could be made, the merchandise sold to Pringle was repossessed. The merchandise had a fair market value of $2,150 after the company spent $110 for reconditioning of the merchandise. The merchandise was originally sold with a gross profit rate of 20%.
Instructions
Prepare the entries on the books of X-Run, Inc. to record all transactions related to Pringle during 2014.