On July 1, 2013, Apache Company sold a parcel of undeveloped land to a construction company for $5,000,000. The book value of the land on Apache's books was $2,000,000. Terms of the sale required a down payment of $200,000 and 24 annual payments of $200,000 plus interest at an appropriate interest rate due on each July 1 beginning in 2014. Apache has no significant obligations to perform services after the sale.
- What should be the balance in the deferred gross profit account at the end of 2014 applying the installment sales method?
- Deferred gross profit at the end of 2014