Answer:
deferred gross profit =$ 453,000
and realized gross profit is $453,000
Explanation:
from the information given in the question , the required profit is related with deferred gross profit.
step 1 calculate gross profit percentage
[tex]Gross\ profit\ percentage =\frac{ (Installment\ sales - Cost\ of\ installment\ sales)}{ Installment\ sales}[/tex]
[tex]= \frac{5,000,000 - 4,000,000}{5,000,000}[/tex]
= 20%
step 2 calculate deferred gross profit
deferred profit = (Total sales of installment - down payment ) × profit percentage
Deferred profit = 5,000,000 - 470,000 - 2,265,000) × 20%
where $2,265,000 represents 1st equal installment of remaining balance
deferred gross profit =$ 453,000
and realized gross profit is $453,000
