Ford Appliance Center Records Revenue on the Installment Sales Method

Multiple Choice

Ford Appliance Center records revenue on the installment sales method. The following information is available for the first two years of business.
$\begin{array}{lrr}&\text { Year } 1&\text { Year } 2\\\text { Sales } & \$ \overline{200,000} & \$ 2 \overline{50,000} \\\text { Cost of goods sold } & 140,000 & 162,500 \\\text { Cash collections: } & & \\\quad \text { Year 1 sales } & 100,000 & 80,000 \\\quad \text { Year 2 sales } & & 130,000\end{array}$
-Which one of the following entries properly records the cost of installment goods sold for Year 2?

A) DR Cost of installment goods sold $\quad$ 162,500
CR Inventory $\quad$$\quad$ 162,500
B) DR Cost of installment goods sold $\quad 302,500$
CR Inventory $\quad$$\quad$ 302,500
C) DR Cost of installment goods sold $\quad$$\quad$ 162,500
CR Installment sales revenue $\quad$$\quad$ 162,500
D) DR Cost of installment goods sold $\quad$$\quad$ 302,500
CR Installment sales revenue $\quad$$\quad$ 302,500