Installment Sales: The following information pertain to problems #1 & #2:

A machine was sold to Barbara Hurley for $10,800, including a 30% markup on selling price. Barbara made a down payment of 20%, four of the remaining 16 equal payments, and then defaulted on further payments. The machine was repossessed, at which time the fair value was determined to be $4,800.

Problem #1

Compute the amount of the Installment Accounts Receivable Balance at the date of default:

Problem #2

Prepare the journal entry to record the repossession: