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Use the installment sales method of accounting

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Charter Corporation, which began business in 2011, appropriately uses the installment sales method of accounting for its installment sales. The following data were obtained for sales during 2011 and 2012:

 

                                                                                                                        2011                   2012

 

 Installment sales                                                                                               $ 360,000            $ 350,000

Cost of installment sales                                                                                      234,000               245,000

 Cash collections on installment sales during:

                2011                                                                                                 150,000               100,000

                2012                                                                                                        _                  120,000

 

Required:

Prepare summary journal entries for 2011 and 2012 to account for the installment sales and cash collections. The company uses the perpetual inventory system.

 

Reference no: EM13504967

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