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

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Definitions:

Client Relationships

Client relationships refer to the ongoing interactions, communications, and management of expectations between a business and its clients, crucial for achieving customer satisfaction and loyalty.

Motivational Strategy

Techniques and approaches used to inspire and encourage individuals or teams to achieve their goals and improve their performance.

Job Enrichment

A strategy used to motivate employees by giving them more responsibilities and variety in their jobs.

Core Job Characteristic

Essential attributes of a role that significantly influence job satisfaction and motivation.