Since there is no reasonable basis for estimating the degree of collectibility, Astor Co. uses the installment method of revenue recognition for the following sales:
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2006
2005
Sales
$900,000
$600,000
Collections from:
2005 sales
100,000
200,000
2006 sales
300,000
—
Accounts written off:
2005 sales
150,000
50,000
2006 sales
50,000
—
Gross profit percentage
40
%
30
%
What amount should Astor report as deferred gross profit in its December 31, 2006 balance sheet for the 2005 and 2006 sales?
$150,000
$160,000
$225,000
$250,000
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