(Installment-Sales Method and Cost-Recovery Method) On January 1, 2007, Barkly Company sold property for $200,000. The note will be collected as follows: $100,000 in 2007, $60,000 in 2008, and

$40,000 in 2009. The property had cost Barkly $150,000 when it was purchased in 2005.

Instructions

(a) Compute the amount of gross profit realized each year, assuming Barkly uses the cost-recovery method.

(b) Compute the amount of gross profit realized each year, assuming Barkly uses the installmentsales method.