Company sells manufacturer close outs at bargain prices

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The Good Buy Furniture Company sells manufacturer close outs at bargain prices. It uses the specific identification method for inventory control, the full accrual method for GAAP conformity and the installment method for revenue recognition. It sells a 4 room set of furniture (living room, dining room and 2 bedrooms) to a customer for $3,330. Mark up on the merchandise is 80%. Terms are a twenty percent down payment and 8 equal monthly payments for the balance (interest free).

Required 1: Assuming no other transaction happened, what revenue is recognized from this transaction in the month of sale? $

Required 2: Assuming no other transaction happened, what is the Cost of Goods Sold recognized in the month of sale? $

Required 3: Assuming no other transaction happened, what revenue is recognized in month 5? $

Required 4: Assuming no other transaction happened, what is the Gross Margin of month 5?

 

Reference no: EM133306653

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