Paul Dobson Stores sell appliances for cash and also on the installment plan. Entries to record cost of sales are made monthly.

A) Compute the rate of gross profit on installment sales for 2014 and 2015.

B) Prepare closing entries as of December 31, 2015, under the installment-sales method of accounting

C) Prepare an income statement for the year ended December 31, 2015. Include only the realized gross profit in the income statement.

PAUL DOBSON STORES TRIAL BALANCE DECEMBER 31, 2015 Debit Credit Cash Installment Accounts Receivable, 2014 Installment Accounts Receivable, 2015 Inventory-New Merchandise Inventory-Repossessed Merchandise Accounts Payable Deferred Gross Profit, 2014 Capital Stock Retained Earnings Sales Revenue Installment Sales Cost of Goods Sold Cost of Installment Sales Loss on Repossession Operating Expenses $153,000 56,000 91,000 123,200 24,000 $98,500 45,600 170,000 93,900 343,000 200,000 255,000 120,000 800 128,000 $951,000 $951,000