The Jolly Company Makes Sales on an Installment Basis

question 8

Multiple Choice

The Jolly Company makes sales on an installment basis. In 2016, it sells items with a cost of $120 million. The total sales price is $125 million. Ignoring interest payments, customers pay in five equal installments, of $25 million each, with one payment in each of 2016, 2017, 2018, 2019, and 2020. If the company uses the cost recovery method of accounting for this sale, the gross profit it will recognize in 2020, the year the last installment is received is

• A) Zero
• B) $1 million
• C) $5 million
• D) $25 million

---

Definitions:

Diplococci

A term used to describe a pair of round bacteria, often found in species such as Streptococcus pneumoniae, which can cause various infections.

Bacilli

A classification of bacteria that are rod-shaped, found in various environments and including both pathogenic and non-pathogenic species.

Lateral Gene Transfer

The non-inheritance transmission of genetic material between different species, contributing to genetic diversity and evolution.

Vertical Gene Transfer

The transmission of genetic information from parent to offspring through sexual or asexual reproduction.