questions 16-20

The XYZFurniture Company commenced business operations on January 1, 19x7. All sales are made on installment contracts and inventory records are on a periodic basis. Contract receivables are kept separate by years. At the end of each year, adjustments for unrealized and realized gross profits are made through a Deferred Gross Profit on Installment Sales account. Defaulted contracts were recorded by debiting the Loss on Defaults account and crediting the appropriate contracts receivable account for the amount unpaid at the time of default. All repossessed merchandise should be recorded at realizable values. The following data are taken from the accounts of the XYZ Fumiture Company December 31 19x7 19x8 Contracts receivable (unpaid balances) $ 3,175 101,375 221,425 154,600 Installment sales.... Purchases New merchandise inventory, 138,675 . 160,000 73,042 5,000 December 31, at cost .. 60,154 Loss on defaults . . Additional data: Repossessed merchandise, originally sold in 19x7, representing the only default and repossession by the company to date, had a realizable value of $2,000 at the time of repossession and at December 31, 19x8 No entry has been made to record this repossessed merchandise 16. The gross profit for 19x7 is A. ($21,325) C. $38,829 D. $79,713. 17. The gross profit percentage for 19x8 is A. 28%. B. 32%. C. 3696. D. 40%