On december 15, 2018, rigsby sales co. sold a tract of land that cost $4,000,000 for $5,000,000. rigsby appropriately uses the installment sales method of accounting for this transaction. terms called for a down payment of $470,000 with the balance in two equal annual installments payable on december 15, 2019, and december 15, 2020. ignore interest charges. rigsby has a december 31 year-end. in 2018, rigsby would recognize realized gross profit of:

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

                                       = 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

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