Problem 1.

Deanna Lawver runs a business emphasizing the sale of merchandise to people who sometime have trouble paying their bills. Therefore, she has decided to use the installment method of reporting gross profit.

Requires:

From the following information, determine the realized gross profit for 2014 and 2015 using the installment method. No journal entries needed.

--------------------------------------------------2014 ------------------------2015---------

Sales ------------------------------------------350,000--------------------400,000

Cost of Goods Sold -----------------------245,000------------------- 240,000

Cash Collected from 2014 Sales ------150,000 -------------------120,000

Cash collected from 2015 Sales--------- -0- ------------------------170,000

Problem 2 :

Ms. Lawyer's accountant, Ching, say "No way lady" These people will never pay up! I going to use the cost recovery method.

Required: To humor Ching, determine the realized gross profit for 2014 and 2015 using the above information.