On January 1, 2012, Bartell Company sold its idle plant facility to Cooper Inc. for $1,050000. On this date, the plant had a depreciated cost of $735,000. Cooper paid $150,000 cash on January 1, 2012, and signed a $900,000 note bearing interest at 10%. The note was payable in three annual installments of $300,000 beginning January 1, 2013. Bartell appropriately accounted for the sale under the installment method. Cooper made a timely payment of the first installment on January 1, 2013, of $390,000, which included interest of $90,000 to date of payment. At December 31, 2013, Bartell had deferred gross profit of:

I know the answer is 180,000. At first I was under the impression it was because the company was making 90,000 interest gross profit time 2 to make it equal 180,000, but that does not seem correct. Any guidance would be greatly appreciated.

To determine the deferred gross profit at December 31, 2013, we need to understand the concept of the installment method and how it applies to this situation.

The installment method is an accounting method used when a company sells property and allows the buyer to make payments over an extended period of time. Instead of recognizing the full gross profit upfront, the gross profit is deferred and recognized proportionally as payments are received.

In this case, Bartell Company sold its idle plant facility to Cooper Inc. for $1,050,000. The plant had a depreciated cost of $735,000, which means the accumulated depreciation on the plant was $735,000.

To calculate the gross profit, we subtract the depreciated cost from the sale price:

Gross Profit = Sale Price - Depreciated Cost
Gross Profit = $1,050,000 - $735,000
Gross Profit = $315,000

Now, let's analyze the payments made by Cooper Inc.

1. On January 1, 2012:
- Cooper paid $150,000 cash.
- Cooper signed a $900,000 note bearing interest at 10%.

2. On January 1, 2013:
- Cooper made the first installment payment of $390,000, which included $90,000 interest.

Based on this information, we can now calculate the deferred gross profit at December 31, 2013.

Deferred Gross Profit = Total Gross Profit - Recognized Gross Profit
Recognized Gross Profit = Gross Profit * (Payments Received / Total Sale Price)

1. Total Sale Price = Cash + Note
Total Sale Price = $150,000 + $900,000
Total Sale Price = $1,050,000

2. Payments Received = Cash + Installment Payment
Payments Received = $150,000 + $390,000
Payments Received = $540,000

3. Recognized Gross Profit = Gross Profit * (Payments Received / Total Sale Price)
Recognized Gross Profit = $315,000 * ($540,000 / $1,050,000)
Recognized Gross Profit = $315,000 * 0.5143
Recognized Gross Profit = $162,000 (rounded to the nearest dollar)

4. Deferred Gross Profit = Total Gross Profit - Recognized Gross Profit
Deferred Gross Profit = $315,000 - $162,000
Deferred Gross Profit = $153,000

Thus, at December 31, 2013, Bartell had a deferred gross profit of $153,000. Note that this value is different from the answer you provided ($180,000). Please check if there are any additional information or calculations that may have been overlooked.