Iowa Development (ID) made the following land sales and had the following cash c

Question

Iowa Development (ID) made the following land sales and had the following cash collections:

2012 sold Altoona land for 2,000,000 that cost ID $1,200,000. The land agreement required payments of $1,000,000 within one week of occupancy of the land, and the other $1,000,000 in 2013 ID received the $1,000,000 payment.

Assume ID cannot estimate uncollectible accounts accurately and recognizes revenue using the IFRS method for significant uncertainty in collectibility.

Required: Prepare journal entries to record the sale, cash collections, and recognition of gross profit (if appropriate) in 2012 and 2013.

Explanation / Answer

Journal Entries Sale 2012 1 Buyer A/c/Purchaser 2000000 To Land 1200000 To Gross Profit 400000 To Deferred Gross Profit 400000 (Being Profit Recognised in Proportion to Colletions) 2 Cash A/c 1000000 To Buyer/Purchaser 1000000 (Collection from Customers) 2013 1 Cash A/c 1000000 To Buyer/Purchaser 1000000 (Collection from Customers) 2 Deferred Gross Profit 400000 To Gross Profit 400000 (Being Deferred Gross Profit was Recognised) Theory Source - Google

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.