What is the company loss on this default

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Question - The Branch Company sells inventory costing $22,500 to a customer for $30,000. Because of significant uncertainties surrounding the transaction, the installment sales method is viewed as proper. In the first year, the company collects $8,000. On the first day of the following year, the customer defaults and the company repossesses the inventory which now has a fair value of only $11,000. What is the company's loss on this default?

$3,500

$5,500

$8,000

$11,000

Reference no: EM132096357

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