On January 1, 2007, Barkly Company sold property for $200,000. The note will be collected as follows: $100,000 in 2007, $60,000 in 2008, and $40,000 in 2009. The property had cost Barkly $150,000 when it was purchased in 2005.
Instructions
(a) Compute the amount of gross profit realized each year, assuming Barkly uses the cost-recovery method.
(b) Compute the amount of gross profit realized each year, assuming Barkly uses the installmentsales method.