(Installment-Sales Method Calculations, Entries) Austin Corporation appropriately uses the installment-sales method of accounting to recognize income in its financial statements. The following information is available for 2007 and 2008.

Instructions

(a) Compute the amount of realized gross profit recognized in each year.

(b) Prepare all journal entries required in 2008.

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2007 2008 Installment sales $900,000 $1,000,000 Cost of installment sales 630,000 680,000 Cash collections on 2007 sales Cash collections on 2008 sales 370,000 350,000 -0- 475,000