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Octagon Co
Octagon Co. appropriately uses the installment sales method of accounting for its installment sales.
During 2006, Octagon made installment sales of $400,000 and received payments of $250,000 on those sales. Octagon's gross profit margin is 40%
Prepare journal entries to record the sale, collection, and recognition of gross profit.
Expert Solution
Account receivable 400,000
sales 400,000
Cash 250,000
Account receivable 250,000
cost of goods sold 400,000*60% = 240,000
Inventory 240,000
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