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