Isabell Werth Stores sell appliances for cash and also on the installment plan. Entries to record cost of sales are made monthly.

The accounting department has prepared the following analysis of cash receipts for the year.
Cash sales (including repossessed merchandise) ......$424,000
Installment accounts receivable, 2007 .......... 104,000
Installment accounts receivable, 2008 .......... 109,000
Other ...................... 36,000
Total .......................$673,000
Repossessions recorded during the year are summarized as follows.
2007_
Uncollected balance ......$8,000
Loss on repossession ...... 800
Repossessed merchandise .... 4,800
Repossessions recorded during the year are summarized as follows.

Instructions
From the trial balance and accompanying information:
(a) Compute the rate of gross profit for 2007 and 2008.
(b) Prepare closing entries as of December 31, 2008, under the installment-sales method of accounting.
(c) Prepare an income statement for the year ended December 31, 2008. Include only the realized gross profit in the incomestatement.

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lsabell Werth Stores Trial Balance December 31, 2008 $153,000 48,000 Installment Accounts Receivable, 2007 Installment Accounts Receivable, 2008 Inventory-New Merchandise Inventory-Repossessed Merchandise Accounts Payable Deferred Gross Profit, 2007 Capital Stock Retained Earnings 123,200 24,000 $ 98,500 45,600 170,000 93.900 343,000 200,000 Instaliment Sales Cost of Sales Cost of Installment Sales Gain or Loss on Repossessions Selling and Administrative Expenses 255,000 128,000 128,000 $951,000 $951,000