P18-8

Installment-Sales Computations and Entries  Presented below is summarized information for Johnston Co., which sells merchandise on the installment basis.

                                                        2014            2015                2016

Sales (on installment plan)            $250,000       $260,000         $280,000

Cost of Sales                                   155,000        163,800           182,000

Gross Profit                                    $95,000          $96,200           $98,000

Collections from customers on:

2014 installment sales                    $75,000        $100,000            $50,000

2015 Installment Sales                                        $100,000            120,000

2016 installment Sales                                                                   100,000

A.  Compute the realized gross profit for each of the years 2014, 2015, and 2016

B.  Prepare all entries required in 2016, applying the installment-sales method of accounting.  (Ignore interest charges.)