Homework Help: accounting-installment sales journal entry

Posted by Toni on Friday, October 24, 2008 at 4:25pm.

Question:

On 12/31/07, Company A sold equipment for $1,800,000. The equipment had a carrying amount of $1,200,000. At the time of the sale the buyer paid $300,000 cash and signed a $1,500,000 note bearing interest of $1,500,000 note bearing interest at 10% payable in five annual installments of $300,000. Company A accounts for the sale under the INSTALLMENT METHOD. On 12/31/08 the buyer paid $300,000 principal and $150,000 interest. What are the journal entries for Company A at the time of the sale?

I am note sure whether the interest should be included in the Installment Receivables / Deferred Gross Profit amounts or if interest is entered separately.

This is a CPA question that asks about the amount of revenue that should be recognized on 12/31/08 but I need clarity on how to do the journal entries.

accounting-installment sales journal entry - SraJMcGin, Friday, October 24, 2008 at 5:34pm
Thank you for using the Jiskha Homework Help Forum. Here are some Journal Entry Tutorials:

1. http://www.middlecity.com/ch03.shtml

2. (part II of #1): http://www.middlecity.com/ch09.shtml

3. http://www.personal.psu.edu/users/m/j/mjd10/Dailey/Accounting211.htm

4. http://members.tripod.com/ojh_computers/bcd/acc_manual3.html

Sra

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