Refer to the situation described in BE 5-1. What should be the balance in the deferred gross profit account at the end of 2012 applying the installment sales method?
In BE 5-1, On July 1, 2011, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000. The book value of the land on Apache's books was $1,200,000. Terms of the sale required a down payment of $150,000 and 19 annual payments of $150,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2012. Apache has no significant obligations to perform services after the sale. How much gross profit will Apache recognize in both 2011 and 2012 assuming point of delivery profit recognition?