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Iowa Development (ID) company made the following land sales and had the following cash collections: 2008: Sold Altoona land for $2,000,000 that cost...
Iowa Development (ID) company made the following land sales and had the following cash collections:2008: 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 2009. ID received the $1,000,000 payment.2009: Sold Boone land for $2,400,000 that cost ID $1,200,000. The land agreement required payments of $800,000 within one week of occupancy of the land and additional payments of $800,000 in 2010 and 2011. ID received the $800,000 payment, and also a $500,000 payment from Altoona land.1. Assume ID can estimate uncollectible accounts accurately, accrues bad debts at 5% of sales, and recognizes revenue upon transfer of title.Required: Using the installment sales method, Prepare journal entries to record the sale, cash collections, and recognition of gross profit (if appropriate) in 2010 and 2011.
