Use the Following Information for Questions 102 and 103

question 135

Multiple Choice

Use the following information for questions 102 and 103.
Coaster manufactures and sells logging equipment. Due to the nature of its business, Coaster is unable to reliably predict bad debts. During 2014, Coaster sold equipment costing $4,800,000 for $7,200,000. The terms of the sale were 20% down, with equal payments due quarterly over the next 3 years. All payments for 2014 were made on schedule. Round answers to two places.
-Assuming that Coaster uses the installment-sales method of accounting for its installment sales, what amount of realized gross profit will Coaster report in its income statement for the year ended December 31, 2014?

• A) $3,360,000
• B) $2,240,000
• C) $1,120,000
• D) $ 739,200

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Definitions:

Natural Conditions

The state of the environment or circumstances that exist without human intervention or artificial influence.

Causal Relationship

A connection between two events or states where one directly influences or brings about the other.

Worldview

A comprehensive perspective from which one sees and interprets the world and interacts with it.

Assumptions

Statements or ideas accepted as true without proof, serving as the basis for further reasoning or argument.