Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales are not reasonably assured, and bad debt losses cannot be reasonably predicted. It is unlikely that repossessed merchandise is in condition to be re-sold. Therefore, Reliable uses the cost recovery method. Merchandise costing $28,500 was sold for $55,250 in 2020. Collections on this sale were $20,900 in 2020, $14,200 in 2021, and $20,150 in 2022.
In 2020, Reliable would recognize gross profit of .
In its 2020 year-end balance sheet, Reliable would report installment receivables (net) of .