Reference no: EM131805144

Problem - The following information was taken form the records of Locken Corporation for the years indicated. The company's year end is December 31.

                                          2002             2003                 2004

Sales (on installment)           $450,000       $500,000          $620,000

Cost of Sales                       342,000         360,000            434,000

Gross Profit                         108,000         140,000            186,000

Cash Receipts:

2002 Sales                          $125,000              $280,000              $45,000

2003 Sales                                                     210,000                230,000

2004 Sales                                                                                250,000

A. Calculate the amount of realized gross profit on installment sales and deferred gross profit to be reported in the year-end financial statements of Locken Corporation for the three years noted.

B. Prepare the journal entries for the years 2002 and 2003.