Use the following information to help with the following questionsOn December 15, 2014, Absolute Sales Co. sold a tract of land that cost $3,600,000 for $4,500,000. Absolute uses the installment sale method of accounting for this transaction. Terms called for a down payment of $500,000 with the balance to be paid in two equal annual installments of $2,000,000 payable on December 15, 2015, and December 15, 2016. Absolute’syear-end December 31st. Assume the annual installments were received when due.1.) In their 2014 income statement, Absolute would recognize realized gross profit of:A) $500,000B) $ 0C) $900,000D) $100,0002.) In their 2015 income statement, Absolute would recognize realized gross profit of:A) $ 0B) $450,000C) $300,000D) $400,0003.) In their December 31, 2014 balance sheet, Absolute would report net installment receivable of:A) $3,200,000B) $4,000,000C) $0D) $3,100,0004.)Suppose Absolute uses cost recovery to account for this sale. In their 2014 income statement, Absolute would recognize realized gross profit of:A) $500,000B) $0C) $900,000D) $100,0005.)Suppose Absolute uses cost recovery to account for this sale. In their December 31, 2014 balance sheet, Absolute would report net installment receivable of:A) $3,200,000B) $4,000,000C) $0D) $3,100,000
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