Installment-sales method and cost-recovery method

Reference no: EM13765291

(Installment-Sales Method and Cost-Recovery Method)

On April 1, 2014, Joy Ltd. sold land for $600,000. The note will be collected as follows: $100,000 in 2014, $200,000 in 2015, and $300,000 in 2016. The property had cost Joy $122,000 when it was purchased in 2001.

Instructions

(a) Compute the amount of gross profit realized each year, assuming Joy uses the cost-recovery method.

(b) Compute the amount of gross profit realized each year, assuming Joy uses the installment-sales method.

Reference no: EM13765291

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