On November 15, 2016, LaGrow Developers Sold a Parcel of Land

question 32

Multiple Choice

On November 15, 2016, LaGrow Developers sold a parcel of land for $4,000,000. They had originally paid $3,600,000 for the land. The terms of the sale called for a $2,000,000 down payment, and the balance in two equal installments payable on November 15, 2017 and November 15, 2018. Disregard interest charges. LaGrow has a December 31 year-end. Refer to LaGrow Developers. Assuming that LaGrow uses the cost-recovery method, in its December 31, 2016 balance sheet, the company would report ________.

• A) $1,000,000 net installment accounts receivable
• B) $200,000 net installment accounts receivable
• C) $1,600,000 net installment accounts receivable
• D) $2,000,000 net installment accounts receivable

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Definitions:

Billboards

Large outdoor advertising structures typically positioned in high-traffic areas to maximize visibility to passersby and motorists.

Newspapers

Printed publications consisting of folded unstapled sheets and containing news, articles, advertisements, and other information.

Prestige Pricing

A pricing strategy where prices are set higher than average to create a perception of exclusivity and high quality.

Quality

The degree to which a product, service, or process meets specified standards or fulfills customer needs and expectations.