E18-21B (Gross Profit Calculations and Repossessed Merchandise)Duke Corporation appropriately uses the installment-sales method of accounting. The following data were obtained for the years 2014 and 2015. Duke did not make any installment sales prior to 2

E18-21B (Gross Profit Calculations and Repossessed Merchandise)Duke Corporation appropriately uses the installment-sales method of accounting. The following data were obtained for the years 2014 and 2015. Duke did not make any installment sales prior to 2014.

                                                                 2014                          2015     

Installment sales                                 $600,000                    $530,000

Cost of installment sales                       480,000                     434,600

General & administrative expenses        25,000                       30,000

Cash collections on sales of 2014        250,000                     285,000

Cash collections on sales of 2015           –0–                          168,000

Instructions

(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. 

                                                                                                                                                             (AICPA adapted)