1. On December 15, 2011, Rigsby Sales Co. sold a tract of land that cost $3,600,000

for $4,500,000. Rigsby appropriately uses the installment sale method of accounting for this transaction. Terms called for a down payment of $500,000 with the balance in two equal annual installments payable on December 15, 2012, and December 15, 2013. Ignore interest charges. Rigsby has a December 31 year-end.

Required:

1. What amount of Deferred Gross Profit should be reported by Rigsby would in its 2012 Balance Sheet?
2. What amount of realized gross profit would Rigsby recognize in 2012 ?