On December 15, 2018, Rigsby Sales Co. sold a tract of land that cost $3,600,000 for $4,500,000. Rigsby appropriately uses the installment sales method of accounting for this transaction. Terms called for a down payment of $500,000 with the balance in two equal annual installments payable on December 15, 2019, and December 15, 2020. Ignore interest charges.
- Rigsby has a December 31 year-end. At December 31, 2019, Rigsby would report in its balance sheet:

Question

Quizplus · Accepted Answer

11ea937b_364b_827f_a419_e9961a560141_TB2599_00 Balance sheet:
Deferred gross profit: $800,000 - 400,000 = $400,000
Realized gross profit of $400,000 would be reported in the income statement.