Question 6 (Revenue Recognition Installment-Sales Method)

Russell Corporation uses the installment-sales method of accounting. The following information is available for 2014 and 2015:

2014 2015______

Installment sales $900,000 $1,000,000

Cost of Installment sales $594,000 $680,000

Cash collection on 2012 sales $370,000 $350,000

Cash collection on 2013 sales $0 $450,000

Compute the amount of realized gross profit recognized in each year.

Prepare all journal entries required for 2015.