Sullivan Software sells packages of a software program and one year's worth of tech support for $770. Its packaging lists the $770 sales price as comprised of a software program at a price of $630 and tech support with a price of $280, with a $140 discount for the package deal. All of Sullivan's sales are for cash, and there are no returns. Sullivan sells the software program separately for $655 and offers a year of tech support separately for $165. The amount of revenue that GAAP, regarding software revenue recognition, would require Sullivan to attribute to the software program is (rounded):

Multiple Choice

A $630.

B $655.

C $615.

D $490

Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales are not reasonably assured, and bad debt losses cannot be reasonably predicted. It is unlikely that repossessed merchandise is in condition to be re-sold. Therefore, Reliable uses the cost recovery method. Merchandise costing $30,750 was sold for $55,250 in 2020. Collections on this sale were $21,900 in 2020, $15,100 in 2021, and $18,250 in 2022. In its 2021 year-end balance sheet, Reliable would report installment receivables (net) of:

Multiple Choice

A $4,500.

B $18,250.

C $15,100.

D $0.

On December 15, 2021, Rigsby Sales Co. sold a tract of land that cost $3,200,000 for $5,000,000. Rigsby appropriately uses the installment sales method of accounting for this transaction. Terms called for a down payment of $440,000 with the balance in two equal annual installments payable on December 15, 2022, and December 15, 2023. Ignore interest charges. Rigsby has a December 31 year-end. At December 31, 2022, Rigsby would report in its balance sheet:

Multiple Choice

A Deferred gross profit of $820,800.

B Cost of installment sales $1,459,200.

C Realized gross profit of $820,800.

D Realized gross profit of $440,000.

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 cost recovery method to recognize revenue on these installment sales. In 2020, Lake began operations and sold jet skis with a total price of $930,000 that cost Lake $465,000. Lake collected $310,000 in 2020, $310,000 in 2021, and $310,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,350,000 that cost Lake $810,000. Lake collected $450,000 in 2021, $365,000 in 2022, and $365,000 in 2023 associated with those sales. In 2023, Lake also repossessed $170,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $63,750 at the time they were repossessed. In its December 31, 2021, balance sheet, Lake would report:

Multiple Choice

A Deferred gross profit of $675,000.

B Installment receivables (net) of $675,000.

C Installment receivables (net) of $360,000.

D Deferred gross profit of $620,000.