Neber Co., which began operations on January 1, 2008, appropriately uses the installment -sales method of accounting. The following information pertains to Neber's operations for the year 2008:
The deferred gross profit account in Neber's December 31, 2008 balance sheet should be
A) $115,200.
B) $192,000.
C) $364,800.
D) $480,000.

Question

Neber Co., which began operations on January 1, 2008, appropriately uses the installment -sales method of accounting. The following information pertains to Neber's operations for the year 2008:
 The deferred gross profit account in Neber's December 31, 2008 balance sheet should be
A) $115,200. 
B) $192,000. 
C) $364,800. 
D) $480,000.

Quizplus · Accepted Answer

$1,200,000 - $720,000 = $480,000 gross profit (40% gross profit rate)
$480,000 - ($288,000 × .4) = $364,800

Neber Co, Which Began Operations on January 1, 2008, Appropriately Uses