E18.

25

1. Repossessed Merchandise 800

Deferred Gross Profit 324
Installment Accounts Receivable 1,080*
Gain on Repossession [$800 – ($1,080 - $324)] 44
*computation of installment accounts receivable balance
Selling price $1,800
Down payment (20% X $1,800) (360)
1,440
Installment payments (4/16 X $1,440) (360)
Installment accounts receivable balance $1,080
2. Repossessed Merchandise
Deferred Gross Profit (20% X $780*) 750
Installment Accounts Receivable 156
Gain on Repossession [$750 – ($780 - $156)] 780*
*computation of installment accounts receivable balance 126
Selling price $1,500
Down payment (240)
1,260
Monthly payments ($80 X 6) (480)
Installment accounts receivable balance $ 780