Cantor Company sold $400,000 to customers on account during 2014,and collected $200,000 during the year.The company properly uses the installment sales method of revenue recognition due to the uncertainty of collection of these installment receivables.The company has determined that cost of sales for the $400,000 of sales was $340,000. What is the correct balance of the company's Deferred Gross Profit account at the end of 2014,after the recognition of revenue for that year?
A) $0
B) $30,000
C) $60,000
D) $140,000

Question

Quizplus · Accepted Answer

Deferred Gross Profit = Gross Profit x Uncollected Sales / Total Sales= ($400,000 - $340,000) x ($400,000 - $200,000) / $400,000= $60,000 x $200,000 / $400,000= $30,000

Cantor Company Sold $400,000 to Customers on Account During 2014,and