Oliver Co Uses the Installment-Sales Method to Record the Sale of of Dining

question 56

Multiple Choice

Oliver Co. uses the installment-sales method to record the sale of dining room sets. When an account had a balance of $14,000, no further collections could be made and the dining room set was repossessed. At that time, it was estimated that the dining room set could be sold for $4,000 as repossessed, or for $5,000 if the company spent $500 reconditioning it. The gross profit rate on this sale was 70%. The gain or loss on repossession was a

• A) $9,800 loss.
• B) $10,000 loss.
• C) $1,000 gain.
• D) $300 gain.

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