Installment Sales
- Cash collections from prior periods calculated and multiplied by prior gross profit %. This will equal the prior gross profit which is now realized this period.
- Maintain layers of accounts receivable if the gross profit % changes.
You must be able to:
- Keep installment sale in separate accounts.
- Determine installment sale gross profit.
- Determine cash collected on specific installment receivables.
- Carry forward each year’s gross profit.