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Phillips Sales Company had the following balances in its accounts on January 1, 2014.
Cash $35,000 Merchandise Inventory 25,000 Land 60,000 Common Stock 50,000 Retained Earnings 70,000
Phillips experienced the following events during 2014.
1. Sold merchandise inventory that cost $20,000 for $37,500. 2. Sold land that cost $25,000 for $40,000.
Required a. Determine the amount of gross margin recognized by Phillips.
b. Determine the amount of the gain on the sale of land recognized by Phillips.
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