Accounting for Installment Sales Flashcards
Who is used the installment method of accounting?
cuando no hay base razonable en estimar el pago de vuelta.
What is the difference under installment accounting regard the rest of accounting?
Revenues is not recognize at the time of sales, but rather when cash is actually collected.
What is the step 1 of installment accounting?
Calculate Gross Profit= Sales - CGS
What is the step 2 of installment accounting?
Calculate Gross Profit Percentage= Gross Profit/ Sales Price
What is the step 3 of installment accounting?
Earned Gross Profit= Cash Collections X Gross Profit Percentage
What is the step 4 of installment accounting?
Deferred Gross Profit= Installment receivable X Gross Profit Percentage
Balance Sheet presentation of installment receivables?
Accounts Receivable Less Deferred Gross Profit
What is the journal entry of the sale under installment accounting?
Installment Receivable
Inventory
Deferred Gross Profit
What is the journal entry to recognize cash collection under installment accounting?
Cash
Installment Sale accounts Receivable
What is the journal entry to record profit on collection under installment accounting?
Deferred Gross Profit
Realized Gross Profit on Installments Sales
How it works Cost Recovery Method?
No profit is recognize on a sale until all costs have been recovered. At the time of sale, the expected profit on the sale is recorded as deferred gross profit.
Journal Entry to record the sale under cost recovery method?
Cost Recovery Receivable
Inventory
Deferred Gross Profit
Journal Entry to record the Collection Year 1 under cost recovery method ?
Cash
Cost Recovery Method
Journal Entry to record the Collection Year 2 under cost recovery method ?
Cash
Cost Recovery Method - cantidad completa que cobro
Deferred Gross Profit
Realized Gross Profit on Cost Recovery Sales
El gross profit que gear luego de recuperar el costo del proyecto.
