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How much is the gain or loss on repossession

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Question - THRALL SLAVE Co. uses the installment method. Information on installment sales in 20x1 and 20x2 is shown below:

20x1 20x2

Sales 400,000 640,000

Cost of sales 320,000 448,000

Gross profit rate 20% 30%

Installment receivable - 20x1 180,000 60,000

Installment receivable - 20x2 288,000

During 20x2, THRALL Co. repossessed a property which was sold in 20x1 for 40,000. Prior to repossession, 10,000 were collected from the buyer. The estimated resale price of the repossessed property was 34,000 after reconditioning costs of 6,000.

Required -

a. How much is the gain or loss on repossession?

b. How much is the total realized gross profit in 20x2?

c. How much is the profit recognized in 20x2?

Reference no: EM133148765

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