Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question: 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

Question:

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 installmentsalesmethod for revenue recognition. In 2015, Lake began operations and sold jet skis with a total price of $900,000 that cost Lake $450,000. Lake collected $300,000 in 2015, $300,000 in 2016, and $300,000 in 2017 associated with those sales. In 2016, Lake sold jet skis with a total price of $1,500,000 that cost Lake $900,000. Lake collected $500,000 in 2016, $400,000 in 2017, and $400,000 in 2018 associated with those sales. In 2018, Lake also repossessed $200,000 of jet skis that were sold in 2016. Those jet skis had a fair value of $75,000 at the time they were repossessed.

In 2017, Lake would recognize realized gross profit of:

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

IFRS edition volume 2

978-0470613474, 470613475, 978-0470616314

More Books

Students also viewed these Accounting questions