Installment Sales Method.

Garber, Inc. accounts for all sales of its merchandise on the installment basis. Following is the

unadjusted trial balance at 12/31/14:

Cash $ 89,200

Installment Accounts Receivable-2012 170,000

Installment Accounts Receivable-2013 400,000

Installment Accounts Receivable-2014 750,000

Inventory, 1/1/14 78,000

Repossessed Merchandise 22,000

Accounts Payable $ 136,00

Deferred Gross Profit-2012 84,000

Deferred Gross Profit-2013 175,000

Common Stock 600,000

Retained Earnings 406,200

Installment Sales 1,000,000

Purchases 738,000

Loss on Repossession 4,000

Operating Expenses 150,000

$ 2,401,200 $ 2,401,200

Additional Data:

2012 Gross Profit Rate = 32%; Inventory 12/31/14 = $ 159,000;

Repossessed merchandise 12/31/14 = $ 14,000;

Merchandise sold in 2013 was repossessed in 2014 and the following

entry was prepared (assume correctly);

Deferred Gross Profit - 2013 .................................. 14,000

Repossessed Merchandise ................................... 22,000

Loss on Repossession .......................................... 4,000

Installment Accounts Receivable-2013 ... ,,,,,,,,,,,,,,,,,,,,,,,,,40,000

(A) Determine collections during 2014 on installment a/r for each of the years 2012, 2013, and 2014. Please show your work.

(b) Without prejudice to your answer to part (a) assume that total collections on installment accounts receivable during 2014 were $1,060,000; $220,000 from 2012 from 2013 $330,000, and $540,000 from 2014. Prepare all necessary adjusting and closing entries at 12/31/14.