lowa Development ()) mae the fotlowing land sales and had the folorning ca colle

Question

lowa Development ()) mae the fotlowing land sales and had the folorning ca collectons 2012 Sold Altoona land for $2.000000 that cost 1 1 200,00n The land ngreement required payments of $1,000,000 within one week of occupancy of the land, and the $1,000.00?? 2013 Required: a-Prepare journal entries to record the sale, cash collections, and recognition uf grow profit in 2012 and 2013 using the installment sales method under U.S GAAPiDeferred gross profit method) b- Repeat the requirement1 applying the IFRS method for significant uncertainty in collectability

Explanation / Answer

Part-1. Journal Entry Date Account Desription , Title Debit Credit 2012 Installment Receivable $2,000,000 Revenue $2,000,000 To Record Revenue Cost of Land Sold $1,200,000 Land Inventory $1,200,000 To record Cost of Land sold Cash $1,000,000 Installment Receivable $1,000,000 To Record Received of Installment 2013 Cash $1,000,000 Installment Receivable $1,000,000 To Record Received of Installment Part-2. Journal Entry Date Account Desription , Title Debit Credit 2012 Installment Receivable $2,000,000 Land Inventory $1,200,000 Deferred Gross Profit $800,000 Cash $1,000,000 Installment Receivable $1,000,000 Cost of Land Sold $600,000 Deferred Gross Profit (2000000-1200000)/2000000*1000000 $400,000 Revenue $1,000,000 2013 Cash $1,000,000 Installment Receivable $1,000,000 Cost of Land Sold $600,000 Deferred Gross Profit $400,000 Revenue $1,200,000

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