King Company is a business located in Queens, NY, that manufacturers equipment. On October 14, Year 2, King sold manufacturing equipment to Prince Company for $1,800,000. See Sale Agreement in the Exhibits tab. King had originally purchased the equipment in Year 1 for $1,750,000. King Company has taken a total of $350,000 MACRS deductions.

Assume that the interest rate provided in the installment agreement is at least equal to the rate required by the applicable federal rate rules.

General Data Entry type instruction: For each item in column A, calculate the requested information and enter it in the associated shaded cell in column B. Enter whole number values as whole numbers. Note that line item 4 requires a percentage; enter this as a decimal value by placing the decimal point between the hundredths and thousandths and round up to the nearest hundreed thousandths. For example, a value of 0.0355556 would be rounded up and entered as 3.556.

A1

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A

B

1

Determine the realized gain on the sale.

2

Determine the adjusted basis for installment sale purposes.

3

Determine the Gross Profit.

4

Determine the Gross Profit Percentage.

5

Determine the amount to be reported as installment sale income in Year 2.