Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales

aren't reasonably assured and bad debt losses can't be reasonably predicted. It's unlikely that repossessed

merchandise will be in salable condition. Therefore, Reliable uses the cost recovery method. Merchandise

costing $30,000 was sold for $55,000 in 2010. Collections on this sale were $20,000 in 2010, $15,000 in

2011, and $20,000 in 2012.

In 2010, Reliable would recognize gross profit of

A. $8,333.

B. $8,090.

C. $0.

D. $25,000.