Presented below is summarized information for Johnston Co., which sells merchandise on the installment basis.

 

a. Compute the realized gross profit for each of the years 2014, 2015 and 2016.

b. Prepare in journal form all entries required in 2016 applying the installment sales method of accounting Ignore interest charges.

2014 2015 2016 Sales (on instaliment plan) Cost of sales $250,000 155,000 $260,000 163,800 $280,000 182,000 $ 98,000 Gross profit $ 95,000 $ 96,200 Collections from customers on: 2014 installment sales installment sales $ 75,000 $ 50,000 $100,000 100,000 120,000 100,000 2015 installment sales 2016