Prepare the journal entries for 2007 and 2008.

Sales Under the Installment Method – The following information is available for the Dassler Company, which began its operations in 2007:

1. Installment method sales

1. Installment method sales

2007

$520,000

2008

600,000

2. Gross profit percentage

2007

20%

2008

24%

3. Cash collections on installment method sales

2007

25% of 2007 sales

2008

55% of 2007 sales

30% of 2008 sales

4. Bad debt policy

The company estimates its bad debts to be 2% of installment method sales.

5. Defaults and repossessions

2007

$10,000 of 2007 installment method sales, of which $1,000 had been collected

2008

$20,000 of 2007 installment method sales, of which $4,000 had been collected

$15,000 of 2008 installment method sales, of which $2,000 had been collected

The policy of the company is to value repossessed items at 40% of their original selling price.

Required

Prepare the journal entries for 2007 and 2008.

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