Installment Sales

Chapter 5

Allan R.Drebin
Installment sales

The installment method of accounting

normally implies the deferral of gross profit
but the recognition of selling and
administrative expenses in the period of
their incurrence.
Sale of Real estate on Installment basis

Recognition of profit in period of sale

Recognition of profit periodically in
Proportion to collections.
Recognition Profit in period of sale
Pada saat Real estate dijual:
Receivable from XXX
Real estate XXX
Gain on sale XXX
Pada saat terima uang muka
Cash XXX
Mortgage Note XXX
Receivable from XXX
Recognition of Profit in Period of sale

Pada saat bayar Biaya2 Penjualan

Selling expenses XXX
Cash XXX
To adjust accounts for Accrued Interest.
Accrued Interest on Mortgage XXX
Interest Income XX
Recogniton of profit in period of sale

Menutup Nominal Accounts

Gain on sale XXX
Interest Income XXX
Selling expenses XXX
Income Summary XXX
Recognition of Profit periodically in
Proportion to collections
Pada saal jual Real Estate:
Receivable from XXX
Real Estate XXX
Deferred Gross ProfitXXX
Pada saat terima Down Payment:
Cash XXX
Mortgage Note XXX
Receivable from XXX
Recognition of Profit periodically in
Proportion to collections
Membayar biaya2 penjualan:
Selling expenses XXX
Cash XXX
To adjust accounts for Accrued Interest.
Accrued Interest on Mortgage XXX
Interest Income XX
Recognition of Profit periodically in
Proportion to collections
Pengakuan Laba kotor:
Deferred Gross Profit XXX
Realized Gross Profit XXX
Menutup Nominal Accounts:
Realized GP XXX
Interest Income XXX
Selling expenses XXX
Income Summary XXX
Sale of merchandise on installment basis

Penjualan anggsuran:
Installment contract Receivable XX
Installment sales XX
Saat terima tagihan:
Cash XXX
Installment contract Receiv. XXX
To adjust and closing:
Cost installment sales XXX
Shipment on installment sales XXX
Sale of merchandise on installment basis

To close installment sales and cost of

installment sales:
Installment sales XXX
Cost of installment sales XXX
Deferred GP XXX
Pengakuan GP setelah ada collection
Deferred GP XXX
Realized GP XXX
Trade-Ins
The value of trade-in and the amount of the
overallowance are calculated as follows:
Amount allowed on trade-in XX
Value of article traded in:
Sale value of article XX
Less:Reconditioning cost XX
GP to be realized XX XX XX
Overallowance XX
Trade-Ins

Merchandise Trade-ins XXX

Overallowance on Inst.Sale XXX
Installment Contracts Rec. XXX
Insatllment sales XX
Cost of installment sales XXX
Merchandise-New XX
Defaults and Repossession

Merchandise Repossession XXX

Deferred GP XXX
Loss on Repossessions XXX
Installment contrat Rec. XX
Interest on installment Contracts

Periodic interest on balance of principal

owed between installments
Periodic interest on installment due
Equal periodic payments that represent
interest and principal
Periodic interest computed on original
principal.