Addams, Inc. appropriately used
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter18: Accounting For Income Taxes
Section: Chapter Questions
Problem 9MC: Brooks Company reported a prior period adjustment of 512,000 in pretax financial "income" and...
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Question
Addams, Inc. appropriately used the installment method of accounting to recognize income in its financial statement. Some pertinent data relating to this method of accounting include:
2021 2022
Installment sales $750,000 $900,000
Cost of sales 450,000 630,000
Gross profit $300,000 $270,000
Collections during year:
On 2021 sales 200,000 200,000
On 2022 sales 240,000
What amount of deferred gross profit should be reported on Addams’ income statement for 2021?
a. $80,000
b. $100,000
c. $220,000
d. $300,000
What amount of realized gross profit should be reported on Addams’ income statement for 2022?
a. $132,000
b. $152,000
c. $176,000
d. $216,000
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