The Very Poor Company is involved in making installment sales whose probability of collection is extremely low. Accordingly, it has elected to use the cost recovery method. Information regarding the years 19A and 19B is as follows:
|
19A
|
19B
|
|
Installment sales
|
$50,000
|
$80,000
|
|
Cost of goods sold
|
35,000
|
60,000
|
|
Gross profit
|
$15,000
|
$20,000
|
|
Collections on 19A sales
|
$25,000
|
$15,000
|
|
Collections on 19B sales
|
-
|
40,000
|
Prepare entries for both years.