- Cockpit Company Sells Its Goods On Installment Basis Under Periodic Inventory System For All Installment Sales The Com 1 (80.49 KiB) Viewed 44 times
transactions during the year 2021 including all necessary adjusting
entries by using installment accounting
method.
Cockpit Company sells its goods on installment basis under periodic inventory system. For all installment sales, the company adds deferred interest and carrying charges which amounted to 10% of selling price. On January 1, 2021, Cockpit Company's general ledger included the following account balances: Debit Credit Inventory S 90.000 Installment Contract Receivable-2020 445,500 Installment Contract Receivable-2019 96,525 Deferred Interest and Carrying Charges 2012 Installment Sales 2011 Installment Sales ? Deferred Gross Profit 2020 Installment Sales 121,500 Deferred Gross Profit 2019 Installment Sales 28,080 During the year 2021, the following transactions occurred: 1. The company made installment sales $520,000 (excluding interest and carrying charges of 10%) and its gross profit was 25%. 2. Cash collections including interest and carrying charges amounted to 10% of selling price on installment contract receivable during the year 2021 are: Installment Contract Receivable 2021 Installment Contract Receivable 2020 Installment Contract Receivable 2019 Deferred interest and carrying charges $24,000 28,550 5,600