Question

27 Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the installment sales method for revenue recognition. In 2020, Lake began operations and sold jet skis with a total price of $960,000 that cost Lake $480,000. Lake collected $320,000 in 2020, $320,000 in 2021, and $320,000 in 2022 associated with those sales. In 2021, Lake sold jet skis with a total price of $1,980,000 that cost Lake $1,188,000. Lake collected $660,000 in 2021, $550,000 in 2022, and $550,000 in 2023 associated with those sales. In 2023, Lake also repossessed $220,000 of jet skis that were sold in 2021. Those jet skis had a fair value of $82,500 at the time they were repossessed. 3.33 points In 2022, Lake would recognize realized gross profit of: 8 00:44:18 Multiple Choice 0 $540,000 0 $0. 0 $160,000. 0 $380,000

Answer 1

solution: Given that Installiment Seceived in Total Installiment installiment Instappement sales received received in received in | 2020 2021 2022 2018 $960,00 $320,000 2023 $329,000 $320,000 $660,000 $750,000 2020 1,980,000 $550,000 liitost 480,000/ Gooss profit % foaie / sales-cost ) I sales ...2020 1960,000 - 480,000 . 1 960,000 : : 0.5 -50% 2021: 11,980,000 - 1,188,000 Question . Cart Mico 1,188,000 1,980,000 30.4 : 40% fin 2022 received Portalement fois 2020 sály $320,000 on which gross profit.y = 50% so secognized profit on 2020sales

320,000 X50Z =$160,000 Also he received $ 550,000 from 2021 sales recognized profile on this sale $ 550,000 X 40% -$945,000 220,000 So total decognized profit .= $ 160,000. # 290,00 0 - $380,000 .:: option g' is correct.