ACCOUNTING TUTORIAL

Wednesday, July 9, 2014

INSTALLMENT SALES ACCOUNTING

IN SOME CASES , THERE ARE CIRCUMSTANCES SURROUNDING A REVENUE TRANSACTIONS SUCH THAT
CONSIDERABLE UNCERTAINTY OF FULL COLLECTION WOULD EXISTS SIMPLY BECAUSE OF THE
INSTALLMENT SALES WHICH NORMALLY HAS A VERY LONG COLLECTION TERMS . THIS SITUATION CAN
OCCUR IF THE SALES IS UNUSUAL IN NATURE OR SALES TO CUSTOMERS WHERE IN CASE OF DEFAULT OF
THIS CUSTOMER , A LITTLE COST OR PENALTY IS CHARGED.

UNDER THIS CIRCUMSTANCES, WHERE UNCERTAINTY OF COLLECTION SUGGEST THAT REVENUE

RECOGNITION SHOULD BE BASED ON THE ACTUAL COLLECTION RATHER THAN THE TIME OF SALE.

THERE ARE APPROACHES THAT REVENUE RECOGNITION DEPENDS ON COLLECTION.

1. INSTALLMENT SALES

2. COST RECOVERY METHOD

3. CASH METHOD.

INSTALLMENT SALES METHOD

ACCOUNTING FOR INSTALLMENT SALES METHOD IS WHERE AT THE TIME OF SALE the following entry is
made. ( IF USING PERPETUAL INVENTORY METHOD)

THIS IS THE REGULAR ENTRY:

 INSTALLMENT ACCOUNTS RECEIVABLE 50,000

INSTALLMENT SALES 50,000

to record sales made on installment.

COST OF INSTALLMENT SALES 25,000

INVENTORY ( USING PERPETUAL) 25,000

to record the cost of the sales made. this is based on qty sold x the cost of the product.

CASH 10,000

INSTALLMENT ACCTS. RECEIVABLE 10,000

to record collection

NOW CONSIDERING THAT IN INSTALLMENT SALES METHOD , THE INSTALLMENT SALES ACCOUNT IS NOT
CONSIDERED A REVENUE YET, AND EVEN THE COST OF SALES FOR INSTALLMENT SALES this two
accounts are REVERSED.at the end of the period. THEREFORE THE CREDIT ENTRY ON THE SALES AND
THE DEBIT ENTRY ON COST OF INSTALLMENT SALES NEED TO BE REVERSED . OF COURSE IF ONLY THESE
ACCOUNT WILL BE THE ONE TO BE REVERSED , THERE IS A DIFFERENCE IN AMOUNT BECAUSE THE
DEBIT IS BIGGER THAN THE COST OF SALES WHICH IS CREDITED, THAT DIFFERENCE IS ACTUALLY THE
GROSS PROFIT , HENCE , AN ACCOUNT NAME "" deferred gross profit " is to be credited. and will not be a
nominal accounts but a REAL ACCOUNTS OR BALANCE SHEET account .

NOW YOU MAY ASK, HOW TO COMPUTE FOR THE ACTUAL REVENUE OR ACTUAL GROSS PROFIT THAT
WILL BE REFLECTED ON THE PROFIT AND LOSS. BECAUSE THE FACT IS THE GROSS PROFIT WAS
TRANSFERRED TO THE BALANCE SHEET.

IN INSTALLMENT ACCOUNTING , THE RECOGNITION OF THE REVENUE IS BASED ON THE AMOUNT OF

COLLECTION OF THAT SALES MADE MULTIPLY BY THE GROSS PROFIT RATIO OF THAT SALES MADE .
BUT SINCE THE GROSS PROFIT WAS CLASSIFIED AS BALANCE SHEET ACCOUNT, IT IS NECESSARY THAT
WHEN A COLLECTION IS MADE, THE EQUIVALENT GROSS PROFIT OF THAT COLLECTION USING THE
GROSS PROFIT RATIO WILL BE TRANSFERRED BACK TO THE PROFIT AND LOSS UNDER THE ACCOUNT
NAME " realized gross profit. , that means if the SALES was totally collected the deferred or the
unrealized gross profit will become zero.

that means revenue is recognized in the profit and loss depending on the amount of collection multiplied
by the gross profit ratio. ( COLLECTIONS X GROSS PROFIT = realized gross profit)

if that is the case. the balance of the unrealized or deferred gross profit if divided by the gross profit
ratio will be equal to the INSTALLMENT SALES RECEIVABLE BALANCE ( deferred gross profit divide gross
profit ratio = RECEIVABLE ) or installment receivable multiplied by the gross profit is the deferred
gross profit appearing on the balance sheet.( RECEIVABLE X GROSS PROFIT RATIO = DEFERRED GROSS
PROFIT )

or the realized gross profit for a particular period divide by the gross profit ratio is equal to the amount
of collections made on the sales. ( REALIZED GROSS PROFIT DIVIDE BY gross profit ratio = COLLECTIONS )

NOW HOW DO YOU COMPUTE FOR THE GROSS PROFIT RATIO.

WHEN YOU ARE ENGAGING IN SELLING A PRODUCT , YOU PURCHASE THAT PRODUCT FROM OTHER
SOURCES FOR RESALE . WHEN YOU ARE TO SELL THAT PRODUCT , YOU MUST ADD A CERTAIN AMOUNT
FROM THE COST OF THE PRODUCT TO ARRIVE AT THE SELLING PRICE.

THE AMOUNT THAT YOU WILL ADD ON THAT COST OF THE PRODUCT IS DEPENDING ON HOW MUCH
YOU WANT TO HAVE A GROSS PROFIT AND THAT GROSS PROFIT WILL ANSWER FOR THE OPERATING
COST AND YOUR NEEDED NET PROFIT.

THE AMOUNT YOU ADD IS THE GROSS PROFIT OF THAT PRODUCT. DIVIDING THAT AMOUNT YOU ADDED
OR THE GROSS PROFIT AGAINST THE SELLING PRICE IS THE GROSS PROFIT RATIO. DIVIDING THE COST OF
THE PRODUCT AGAINST THE SELLING PRICE IS THE COST OF SALES RATIO.

NOW, IT WOULD BE IMPRACTICAL THAT EVERYTIME YOU PURCHASE A PRODUCT , YOU WILL THINK OF
HOW MUCH YOU HAVE TO ADD TO ARRIVE AT SELLING PRICE. THEREFORE YOU HAVE SET A COST OF
SALES RATIO AGAINST THE SELLING PRICE SO THAT EVERYTIME YOU PURCHASED A PRODUCT YOU JUST
DIVIDE YOU COST TO THIS COST RATIO TO ARRIVE AT SELLING PRICE., IT'S AUTOMATIC NOW THAT THE
COST LESS THE SELLING PRICE IS YOUR GROSS PROFIT , SO GROSS PROFIT DIVIDE SALES PRICE IS YOUR
GROSS PROFIT RATIO.

EXAMPLE

PURCHASED COST 3,300.00 AND YOU KNOW THAT YOUR COST RATIO IS 80%, SO DIVIDE
3,300.00 BY 80%, YOU GET 4,125.00 AS SELLING PRICE.

SELL PRICE 4,125

COST 3,300 80%

GROSS PROFIT 825 20%

This deferred gross profit account though a non assets accounts , can be presented as a contra
accounts of INSTALLMENT ACCOUNTS RECEIVABLE or can be presented as a DEFERRED ACOUNT ON THE
LIABILITIES SIDE . The following are pro forma journal entries and adjusting entry:

1. SALES ON INSTALLMENT

INSTALLMENT ACCTS. REC 50,000

INSTALLMNET SALES 50,000

2. COST OF THE PRODUCT at 20% mark up on sales price.

COST OF SALES ON INSTALLMENT 10,000

INVENTORY( perpetual)SHIPMENTS( periodic) 10,000

3. EXPENSES OF THE COMPNAY

SELLING AND GEN . EXP 1,000

 CASH OR ACCTS. PAY 1,000

4. COLLECTIONS

CASH 20,000

INSTALLMENT REC. 2011 5,000

INST. RECE 2012 10,000

INST RECE 2013 5,000

5. CLOSING OF INSTALLMENT SALE ACCOUNT AND COST OF SALES AND SET UP OF DEFERRED GROSS
PROFIT. FOR SALES THIS PERIOD.

INST. SALES 50,000

COST OF SALES INST. 10,000

DEFERRED GROSS PROFIT 40,000

6. TO RECOGNIZE THE REALIZED GROSS PROFIT BASED ON COLLECTION X GROSS PROFIT RATIO

DEFERRED GROSS PROFIT 2013 1,000

DEF. GROSS PROFIT 2012 2,000

DEF. GROSS PRFIT 2011 1,500

REALIZED GROSS PROFIT 4,500

7. CLOSING ENTRIES( PERPETUAL INV. METHOD) PERIODIC

REALIZED GROSS PROFIT 4,500 cost of sales/inst(inc/exp). xxx

SELLING AND GEN EXP 1,000 inv. beg xxx

INCOME EXP SUMM 3,500 close beg inv

inc.exps summ xxx

 purchases xxx

close purch.

INV. END XXX

inc. exp summ xxx

set up inv. end

realized g.p. xxx

shipments xxx

expenses xxx

inc.exp summ xxxx

LET ME GIVE YOU AN EXAMPLE OF INSTALLMENT SALE METHOD

TAKE NOTE THAT THE PRE TRIAL BALANCE WOULD SHOW YOU THE INSTALLMENT SALES ACCOUNT AND
THE COST OF INSTALLMENT SALES ACCOUNT OF THE CURRENT PERIOD BECAUSE THE CLOSING OF THAT
ACCOUNTS ARE MADE AS PART OF THE ADJUSTING JOURNAL ENTRIES

THE DEFERRED GROSS PROFIT AND THE INSTALLMENT ACCTS. RECEIVABLE OF PREVIOUS SHALL BE
INDICATED IN THE BALANCE SHEET WITH INDICATION OF WHAT YEAR IT WAS JOURNALIZED

ILLUSTRATIVE EXAMPLE..

A PRE TRIAL BALANCE DEC 31, 2013 APPEARS BELOW

CASH 70,000

INSTALLMENT REC 2013 137,500

INST. REC 2012 30,000

INST. REC 2011 7,500

ACCOUNTS RECEIVBLE 42,500

MDSE INV. BEG 130,000

OTHER ASSETS 120,000

ACCTS PAYABLE 80,000

DEFERRED GROSS PROFIT 2012 112,500

DEF. GROSS PROFIT 2011 24,000

CAPITAL STOCK 212,500

RETAINED EARNINGS 171,000

SALES REGULAR 312,500

INSTALLMENT SALES 800,000

PURCHASES 875,000

COST OF INST. SALES 580,000

COST OF SHIPPED INSTALLMENT GOODS 580,000

EXPENSES 300,000

TOTAL 2,292,500 2,292,500

REQUIRED: 1. CALCULATE THE GROSS PROFIT RATIO OF 2011,2012,2013

2, MAKE THE ADJUSTING ENTRIES, SETTING UP THE DEFERRED GROSS PROFIT AND CLOSING THE
INSTALLMENT SALES ACCOUNT AND THE COST OF INSTALLMENT SALES ACCOUNT.

3. PREPARE PROFIT AND LOSS AND BALANCE SHEET.

AS I HAVE EXPLAINED EARLIER ABOVE , BEFORE YOU CAN COMPUTE THE REALIZED GROSS PROFIT ,SO
THAT AN ADJUSTING ENTRY CAN BE MADE , YOU MUST KNOW THE GROSS PROFIT RATIO OF THE
PRODUCT SOLD, IN THE ABOVE EXAMPLE IT WOULD APPEAR THAT EVERY YEAR THERE IS DIFFERENT
GROSS PROFIT RATIO.
ALSO AS EXPLAINED THE BEGINNING BALANCE OF RECEIVABLE AND THE DEFERRED GROSS PROFIT ( even
those end of the year before adjustment is also a beginning balance ) IS DIRECTLY RELATED TO EACH
OTHER BECAUSE THE RECEIVABLE DECREASES THE SAME AMOUNT OF THE DEFERRED GROSS PROFIT AS
A RESULT OF THE COLLECTION MADE AND BEING MULTIPLIED TO THE GROSS PROFIT RATIO TO REDUCE
THE DEFERRED GROSS PROFIT. THAT MEANS , IF YOU DIVIDE THE DEFERRED GROSS PROFIT WITH THE
COST PROFIT RATIO , THE ANSWER IS THE BEGINNING LAST YEAR OF THE RECEIVABLE AMOUNT.

NOW CONSIDERING THAT THE ABOVE EXAMPLE DID NOT SPECIFY HOW MUCH COLLECTION WAS MADE
FOR 2011, 2012, A RECONSTRUCTION OF THE installment receivable account must be made to
determine how much collection was made on a particular year..

THE LAST YEAR BALANCES OF INSTALLMENT RECEIVABLE ARE AS FF:

2011 75,000

2012 375,000

IT IS ASSUMED THAT THE ENDING DEFERRED GROSS PROFIT THIS YEAR IS THE LAST YEAR ENDING
BALANCE ALSO BECAUSE THAT BALANCE IS BEFORE ADJUSTING ENTRIES.

GROSS PROFIT RATIO IS COMPUTED AS FF::

FOR 2011 DEFERRED GROSS PROFIT 24,000

DIVIDE INST. RECEIVABLE beg 75000

equals 32% gross profit ratio

FOR 2012 deferred gross profit per trial balance 112,500

divide receivable beg. 375,000

equals 30%
FOR 2013

INSTALLMENT SALES AMOUNT 800,000

COST OF INSTALLMENT SALES 580,000

GROSS PROFIT 220,000

220,000 DIVIDE 800,000 EQUALS 27.5%

DIVIDE INSTALLMENT SALES AMOUNT 800,000

THE ADJUSTING JOURNAL ENTRIES.

1. IS TO ADJUST THE DEFERRED GROSS PROFIT FOR 2011, 2012 BY KNOWING THE COLLECTION MADE
FOR 2011, 2012 THIS YEAR.. THIS IS HOW TO RECONSTRUCT THE RECEIVABLE TRANSACTIONS SINCE
THERE IS NO DATA ON HOW MUCH WAS COLLECTED FOR 2011, 12 .

SINCE THE ENDING RECEIVABLE AND THE BEGINNING RECEIVABLE IS GIVEN , AND THE ENDING BALANCE
IS SMALLER THEREFORE THERE IS A CREDIT MADE ON THE RECEIVABLE ACCOUNT WHICH REPRESENT
COLLECTION., HENCE THAT REDUCTION IS THE COLLECTION ITSELF.

2011 2012

BEG RECEIVABLE 75,000 375,000

ENDING BALANCE 7,500 30,000

EQUALS COLLECTION 67,500 345,000

FOR 2013

INSTALLMENT SALES MADE 800,000

BALANCE END OF THE YEAR 137,500

 EQUALS COLLECTION 662,500

JOURNAL ENTRIES ADJUSTING:

1. INSTALLMENT SALES 800,000

COST OF INSTALLMENT SALES 580,000

DEFERED GROSS PROFIT 2013 220,000

to recognize the deferred gross profit in view of the closing of sales and the cost of sales

2. DEFERRED GROSS PROFIT 2011 ( 67,500 X 32%) 21,600

DEFERRED GROSS PROFIT 2012( 345,000X 30%) 103,500

DEFERRED GROSS PROFIT 2013 ( 662,500 X 27.5%) 182,187.50

REALIZED GROSS PROFIT 307,287.50

to recognize the realized gross profit and reducing the deferred gross profit.

3. cost of sales 130,000

beg. inventory 130,000

to close beg inventory

4. COST OF SALES 875,000

PURCHASES 875,000

to close purchases to cost of sales

5. INVENTORY 150,000

COST OF SALES 150,000

 to set up ending inventory

CLOSING ENTRIES.

1. INCOME EXP SUMMARY 855,000

COST OF SALES 855,000

to close cost of sales account

2. REALIZED GROSS PROFIT 307,287.50

SALES 312,500.00

SHIPMENT OF INST. SALES 580,000.00

INCOME EXP. SUMM 1,199,787.50

to close income account

3. INCOME EXP SUMMARY 378,750.00

OPERATING EXPENSES 378,750.00

to close expense account.

4. retained earnings 33962.50

income exp summ 33,962.50

to transfer net loss to retained earnings.

EXERCISES:
1. COMPLE THE FOLLOWING UNKNOWN DATA

1995 1996 1997

installment sales 50,000 80,000 ?

cost of inst. sales ? ? 91,800

gross profit ? ? 28,200

gross profit ratio ? 25% ?

collections 1995 ? 25,000 10,000

1996 20,000 50,000

1997 45,000

realized gross profit 1,100 10,500 ?

Hint: 1. answer first the 1995 unknown.

2. since the realized gross profit in 1996 is given, and the gross profit ratio of 1996 is given then you
can compute the realized gross profit of 1996 which is part of the 10,500.

3. since the collection in 1996 for the sales made in 1995, and the realized gross profit in 1996 for 1995 is
known already then you can compute for the gross profit ratio in 1995.

4. all the unknown now can be easily computed.

==============================================================

2. a company has the ff: data

1995 1996 1997

inst. sales 210,000 270,000 350,000

gross profit ratio 25% 29% 27%

required: compute gross profit, cost of sales, realized gross profit, collections.
the collection history confirms that the sales was collected at 10% first year , 40% 2nd year , 30% 3rd
year

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.EXERCISE 3

IN JAN 1, 1997 A COMPANY SOLD A PARCEL OF LAND COSTING 85,000 FOR 140,000, 10%
DOWNPAYMENT, BALANCE TO PAY ANNUALLY FOR 10 YRS AT 12% INTEREST PAYABLE EVERY END OF DEC.

REQUIRED: HOW MUCH IS THE ANNUAL PAYMENT.

JOURNAL ENTRIES FOR THE FIRST YEAR.

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IN INSTALLMENT SALES , IT WOULD BE COMMON THAT A DEFAULT ON PAYMENT CAN HAPPEN AND
REPOSSESSIONS OF THE PRODUCT IS NECESSARY

IN THE BALANCE SHEET , THERE EXIST A RECEIVABLE FOR THAT CUSTOMER AND A DEFERRED GROSS
PROFIT FOR THAT PRODUCT. SINCE THE PRODUCT WILL BE REPOSSESSED , THE BALANCE OF THE
RECEIVABLE AND THE DEFERRED GROSS PROFIT HAS TO BE CLOSED.

THE DIFFERENCE BETWEEN THE RECEIVABLE AND THE DEFERRED GROSS PROFIT IS ACTUALLY THE COST
OF THE PRODUCT ITSELF BECAUSE ANY REDUCTION ON THAT RECEIVABLE DUE TO COLLECTION , THE
DEFERRED GROSS PROFIT IS ALSO CORRESPONDING REDUCED BY APPLYING THE PROFIT RATIO ON THAT
COLLECTION.

THAT MEANS , IF THAT PRODUCT IS REPOSSESSED , THE RECEIVABLE IS CLOSED AND THE DEFERRED
GROSS PROFIT IS CLOSED , THE DIFFERENCE IS THE ORIGINAL COST OF THAT PRODUCT. NOW ,
CONSIDERING THAT THE PRODUCT UNDERGO DEPRECIATION DUE TO WEAR AND TEAR THAT INVENTORY
MAY NOT BE ANYMORE REALISTIC, HENCE A PROPER VALUATION IS NECESSARY, WHERE IS EITHER GAIN
OR LOSS MAY OCCUR DUE TO REPOSSESSIONS.
EXAMPLE:

INVENTORY 5,000

DEFERRED GROSS PROFIT 10,,000

INST. RECEIVABLE 15,000

THEREFORE , A PROPER VALUATION ON THE RETURNED PRODUCT IS NEEDED. THE FOLLOWING MAY BE
THE BASIS.

1. THE FAIR MARKET VALUE., IF MORE THAN THE COST , HENCE A GAIN, IF LESS, THEN A LOSS ON
REPOSSESSIONS

2. THE BOOK VALUE OR THE COST, NO GAIN NOR LOSS

3. RESALE VALUE LESS RECONDITIONING COST PLUS NORMAL PROFIT

4. NO MORE VALUE, A TOTAL LOSS.

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

TRADE INS

PRODUCTS BEING TRADED IN AS PART OF PAYMENT FOR THE NEW PRODUCT PURCHASED SHOULD BE
RECORDED AT VALUES AFTER RECONDITIONING COST , WILL MAKE THE PRODUCT REALIZE A NORMAL
GROSS PROFIT ON IT SSALE.

AS TO INDUCE A SALES , AN OVERALLOWANCE IS GIVEN ON THE PRODUCT BEING TRADE IN. THIS
OVERALLOWANCE AMOUNT MAY BE RECORDED AS A SEPARATE ACCOUNT AND DEDUCT ON THE SALES
FIGURE ON TEH PROFIT AND LOSS OR MAYBE APPLIED ON THE SALES FIGURE .

EXAMPLE:
 A PRODUCT COSTING 5,000.00 IS SOLD AT 8,000. A USED SIMILAR PRODUCT IS ACCEPTED AS PARTIAL
PAYMENT FOR 1,000. THE USED PRODUCT CAN BE RESOLD AT 1,500.00 AFTER REPAIR COST OF 400.00
THE COMPANY WANTS A 20% GROSS PROFIT ON TEH RESALE OF THE USED CAMERA.

IF THAT CAN BE SOLD AT 1500.00

THE MARK UP IS 20% x 1500 ( 300.00)

THEREFORE COST IS 1,200.00

less THE REPAIR COST ( 400.00)

cost to value the trade in 800.00

ACTUAL COST ACCEPT AS TRADE IN 1,000.00

OVER ALLOWANCE 200.00

the entry is :

INVENTORY TRADE IN 800

TRADE IN OVER ALLOWANCE 200

INST. RECE 7,000

INSTALLMENT SALES 8,000

COST OF INST. SALES 5,000

INVENTORY 5,000

======================================================================
INTEREST ON INSTALLMENT RECEIVABLE

when interest is calculated , the interest revenue should be accounted for separately, that is, each
payment received is separated into interest revenue. the interest revenue should be recorded on
accrual basis.

EXAMPLE :

On Oct end , a lot is sold costing 200,000.00 for 300,000.00 . a 75,000 down was made and the balance
payable in monthly installment with first payment due end nov. payable in 75 months. the monthly
installment is 3,000 a month plus 12% interest on the unpaid balance

ENTRIES

CASH 75,000

Notes receivable 225,000

REAL ESTATE 200,000

DEFERRED GROSS PROFIT 100,000

November

Cash 5,250.00

notes rece 3,000

interest income 2,250

dec. 31
cash 5,220.00

notes rec 3,000.00

interest 2,220.00

to record collection in dec. with a principal balance of 222,000 x 1% =2220.00

deferred gross profit 27,000

realized gross profit 27,000

to record the realized gross profit for the collection of 81,000 x .33.333.% mark up

===============================================================

EXERCISE PROBLEM INSTALLMENT SALES

A TRIAL IS SHOWN BELOW. AS OF DEC 31, 2013

CASH 62,500

INS. REC. 2013 200,000

INST. REC 2012 50,000

INST REC 2011 12,500

ACCTS REC 100,000

INVENTORY 75,000

OTHER ASSETS 130,000

ACCTS PAYABLE 187,500

DEF. GROSS PROFIT 2012 240,000

DEF GROSS PROFIT 2011 56,250

CAPITAL STOCK 250,000

RETAINED EARNINGS 111,250

SALES 480,000

INSTALLMENT SALES 1,250,000

PURCHASES 1,137,500

REPOSSESS INV 25,000

COST OF INSTALLMENT 775,000

SHIPMENTS ON INST. SALES 775,000

LOSS ON REPOSSESS 32,500

EXPENSES 750,000

TOTAL 3,350,000 3,350,000

THE FOLLOWING BEGININNING BALANCES OF SOME ACCOUNTS AS OF DEC 31, 2012 LAST YEAR.

INSTALLMENT RECEIVABLE 2012 600,000

INST. REC. 2011 125,000

DEF. GROSS PROFIT 2012 240,000

DEF. GROSS PROFIT 2011 56,250

THE INVENTORY AS OF DEC 31, 2013 IS 87,500

DURING THE YEAR THERE WAS AN ENTRY WHICH IS INCOMPLETE FOR A REPOSSESSED UNITS.
 REPOSSESSED INV. 25,000

LOSS ON REPOSSESSION 32,500

INSTALLMENT RECE 2013 12,500

INSTALLMENT REC 2012 25,000

INSTALLMENT REC 2011 20,000

REQUIRED:

1. compute the gross profit for the three years.

2. correct the wrong entry.

3 make adjusting and closing entries.

4. make PROFIT AND LOSS AND BALANCE SHEET.

NOTE:

When a repossession is made , the corresponding deferred gross profit of the product should also be
reversed . Since there is no debit to this account, the balancing account used was loss on repossesion

it would appear that the repossessed units below to 2013, 2012,2011 sales. because all the 3 yrs
receivable were credited.

IN determining the the amount of collection , make sure you adjust first the ending balance of the
installment receivable because that was reduced because of the entry made out of the repossessions