Lowery, Inc., an Arizona land speculator, started business on May 1, 2008. It sold 700 acres of desert sand to a local developer for \($960\) an acre. Lowery is paid 60% of the selling price when the contract is signed, with the balance due in 24 months; however, collection is not assured.
Lowery’s property acquisition costs were \($350\) per acre and property taxes of \($75,000\) were paid during the year.
Required:
Compute Lowery’s 2008 pre-tax income and determine its Accounts receivable balance at December 31, 2008, using the installment sales method.