<u>Solution and Explanation:</u>
Installment Receivables (Net) of $2,905,600
Basis Particulars Debit Credit
Sale:- Instalment Receivables $5,000,000
Inventory $3,200,000
Deferred gross profit $1,800,000
Payment:- Cash $4,90,000
Instalment Receivables $4,90,000
Deferred Gross profit $165,600
Realised Gross profit $165,600
Instalment Receivables ($5,000,000 minus $490,000) = $4,510,000
Deferred gross profit ($1,800,000 minus $165,600) = $1,634,400
Instalment Receivables (Net) = $2,875,600
