Use the following information for the next two questions. Blamo Inc. uses the installment-sales method to account for its installment sales. Below you will find data regarding installment sales and collections on those sales for 2012, 2013, and 2014.

Installment sales: 2012 2013 2014

Sales $2,500 $2,600 $2,800

Cost of sales 1,500 1,690 1,736

Gross profit 1,000 910 1,064

Rate of gross profit 40.0% 35.0% 38.0%

Collections from customers:

2012 sales $750 $1,000 $ 500

2013 sales 1,000 1,200

2014 sales 1,000

Total 750 2,000 2,700

8. Under the installment-sales method, how much gross profit should be recognized in 2014?

a. $1,064

b. $1,017

c. $1,026

d. $1,000

9. Assuming no repossessions have occurred, what is the balance in the account, Deferred Gross Profit (2012), as of 12/31/2014?

a. $250

b. $100

c. $ 95

d. $400

Please answer both questions with detailed explanations and calculations!!!