Installment sales method; journal entries
Response to the following problem:
Charter Corporation, which began business in 2016, appropriately uses the installment sales method of accounting for its installment sales. The following data were obtained for sales during 2016 and 2017:
|
|
2016
|
2017
|
|
Installment sales
|
$360,000
|
$350,000
|
|
Cost of installment sales
|
234,000
|
245,000
|
|
Cash collections on installment sales during:
|
|
|
|
2016
|
150,000
|
100,000
|
|
2017
|
|
120,000
|
Required:
Prepare summary journal entries for 2016 and 2017 to account for the installment sales and cash collections. The company uses the perpetual inventory system.