(Installment-Sales Computations and Entries) 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.

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 2008 and 2009.
$424,000 104,000 109,000 36,000 $673,000

(b) Prepare closing entries as of December 31, 2009, under the installment-sales method of accounting.

(c) Prepare an income statement for the year ended December 31, gross profit in the income statement.

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ISABELL WERTH STORES TRIAL BALANCE DECEMBER 31, 2009 Cashi Installment Accounts Receivable, 2008 Installment Accounts Receivable, 2009 Inventory New Merchandise Inventory Repossessed Merchandise Accounts Payable Deferred Gross Profit, 2008 Dr. Cr. $153,000 48,000 91,000 123,200 24,000 $ 98,500 45,600 170,000 Capital Stock Retained Earnings 93,900 Sales 343,000 Installment Sales 200,000 Cost of Sales 255,000 Cost of Installment Sales 128,000 Loss on Repossessions 800 Selling and Administrative Expenses 128,000 $951,000 $951,000