Baker Company is a real estate developer that began operations on January 2, 2014. It appropriately uses the installment method of revenue recognition. Baker€™s sales are made on the basis of a 10% down payment with the balance payable over 30 years. Baker€™s gross profit percentage is 40%. Relevant information for Baker€™s first two years of operations follows:

Required:
1. At December 31, 2014, Baker€™s deferred gross profit was how much?
2. Baker€™s realized gross profit for 2015 was howmuch?

Transcribed Image Text:

Sales Cash collections 2015 $16,000,000 2,020,000 2014 $14,000,000 ,400,000