Brief Exercise 18-13

Lazaro Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $800, resulting in a gross profit rate of40%. At the time of repossession, the uncollected balance is $520, and the fair value of the repossessed merchandise is $275.

Prepare Lazaros entry to record the repossession. (Credit account titles are automatically indented when amount is entered. Do not indent manually.)