Z-Mart Appropriately Uses the Installment Sales Method of Accounting for Its

question 52

Essay

Z-Mart appropriately uses the installment sales method of accounting for its installment sales. During 2013, Z-Mart made installments sales of $300,000 and received payments of $135,000 on those sales. Z-Mart's gross profit margin is 30%.
Required: Prepare journal entries to record the sale, collection, and recognition of gross profit.

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Definitions:

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was put into use.

Investing Activities

Part of a company's cash flow statement that reports the purchase and sale of long-term investments and property, plant, and equipment.

Gain

Gain refers to an increase in economic benefits or inflow of assets that result in an increase in equity, not related to contributions from equity participants.

Office Equipment

Assets like computers, desks, and chairs used in an office to carry out operations, not immediately consumed in the production process.