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Installment Sales Chapter 5 Allan R.Drebin

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Installment sales The installment method of accounting normally implies the deferral of gross profit but the recognition of selling and administrative expenses in the period of their incurrence.

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Sale of Real estate on Installment basis Recognition of profit in period of sale Recognition of profit periodically in Proportion to collections.

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Recognition Profit in period of sale Pada saat Real estate dijual: Receivable from …XXX Real estateXXX Gain on saleXXX Pada saat terima uang muka Cash XXX Mortgage Note XXX Receivable from … XXX

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Recognition of Profit in Period of sale Pada saat bayar Biaya2 Penjualan Selling expensesXXX CashXXX To adjust accounts for Accrued Interest. Accrued Interest on Mortgage XXX Interest IncomeXX

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Recogniton of profit in period of sale Menutup Nominal Accounts Gain on saleXXX Interest IncomeXXX Selling expensesXXX Income SummaryXXX

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Recognition of Profit periodically in Proportion to collections Pada saal jual Real Estate: Receivable from… XXX Real EstateXXX Deferred Gross ProfitXXX Pada saat terima Down Payment: Cash XXX Mortgage Note XXX Receivable from… XXX

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Recognition of Profit periodically in Proportion to collections Membayar biaya2 penjualan: Selling expensesXXX CashXXX To adjust accounts for Accrued Interest. Accrued Interest on Mortgage XXX Interest Income XX

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Recognition of Profit periodically in Proportion to collections Pengakuan Laba kotor: Deferred Gross ProfitXXX Realized Gross ProfitXXX Menutup Nominal Accounts: Realized GPXXX Interest IncomeXXX Selling expensesXXX Income SummaryXXX

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Sale of merchandise on installment basis Penjualan anggsuran: Installment contract Receivable XX Installment sales XX Saat terima tagihan: CashXXX Installment contract Receiv. XXX To adjust and closing: Cost installment salesXXX Shipment on installment sales XXX

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Sale of merchandise on installment basis To close installment sales and cost of installment sales: Installment salesXXX Cost of installment salesXXX Deferred GPXXX Pengakuan GP setelah ada collection Deferred GPXXX Realized GPXXX

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Trade-Ins The value of trade-in and the amount of the overallowance are calculated as follows: Amount allowed on trade-inXX Value of article traded in: Sale value of article XX Less:Reconditioning cost XX GP to be realized XX XX XX OverallowanceXX

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Trade-Ins Merchandise –Trade-insXXX Overallowance on Inst.SaleXXX Installment Contracts Rec.XXX Insatllment salesXX Cost of installment salesXXX Merchandise-NewXX

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Defaults and Repossession Merchandise –Repossession XXX Deferred GP XXX Loss on Repossessions XXX Installment contrat Rec.XX

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Interest on installment Contracts Periodic interest on balance of principal owed between installments Periodic interest on installment due Equal periodic payments that represent interest and principal Periodic interest computed on original principal.

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