installment sales default and repossession crawford imports inc 264125

Installment Sales—Default and Repossession Crawford Imports Inc. was involved in two default and repossession cases during the year:

1. A refrigerator was sold to Cindy McClary for $1,800, including a 30% markup on selling price. McClary made a down payment of 20%, four of the remaining 16 equal payments, and then defaulted on further payments. The refrigerator was repossessed, at which time the fair value was determined to be $800.

2. An oven that cost $1,200 was sold to Travis Longman for $1,500 on the installment basis. Longman made a down payment of $240 and paid $80 a month for six months, after which he defaulted. The oven was repossessed and the estimated fair value at time of repossession was determined to be $750. Prepare journal entries to record each of these repossessions using a fair value approach. (Ignore interest charges.)

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