Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the cost recovery method to recognize revenue on these installment sales. In 2020. Lake began operations and sold jet skis with a total price of $1,170,000 that cost Lake $585,000. Lake collected $390,000 in 2020. $390.000 in 2021, and $390,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1.200.000 that cost Lake $720.000. Lake collected $400.000 in 2021, $340,000 in 2022, and $340,000 in 2023 associated with those sales. In 2023, Lake also repossessed $120.000 of jet skis that were sold in 2021. Those jet skis had a fair value of $45.000 at the time they were repossessed. In its December 31, 2021. balance sheet, Lake would report: Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the cost recovery method to recognize revenue on these installment sales. In 2020. Lake began operations and sold jet skis with a total price of $750.000 that cost Lake $375,000. Lake collected $250,000 in 2020. $250.000 in 2021, and $250,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $2,040.000 that cost Lake $1,224.000. Lake collected $680.000 in 2021. $544.000 in 2022, and $544.000 in 2023 associated with those sales. In 2023, Lake also repossessed $272,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $102,000 at the time they were repossessed. In 2022, Lake would recognize realized gross profit of. Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the Installment sales method for revenue recognition. In 2020. Lake began operations and sold jet skis with a total price of $930,000 that cost Lake $465,000. Lake collected $310,000 in 2020. $310.000 in 2021, and $310.000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1.470,000 that cost Lake $882,000. Lake collected $490.000 in 2021, $400,000 in 2022, and $400.000 in 2023 associated with those sales. In 2023. Lake also repossessed $180,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $67,500 at the time they were repossessed. In 2022, Lake would recognize realized gross profit of. Flapper Jack's Pancake Restaurants Inc. sells franchises for an initial fee of $44,500 plus operating fees of $1,350 per month. The initial fee covers site selection, training. computer and accounting software, and on-site consulting and troubleshooting, as needed, over the first five years. On March 15, 2020. Tim Cruise signed a franchise contract, paying the standard $7,700 down with the balance due over five years with interest. Assume that at the time of signing the contract, collection of the receivable was assured and that service obligations were substantial. However, by October 20.2020. substantially all continuing obligations had been met. The journal entry required at October 20, 2020 would include a
