Parker Clothing Company sells its products on an installment sales basis. Data for 2010 and 2011 follow:
|
2010 |
2011 |
|
|
Installment sales |
$800,000 |
$960,000 |
|
Cost of goods sold on installment sales |
560,000 |
720,000 |
|
Other expenses |
120,000 |
160,000 |
|
Cash collected from 2010 sales |
480,000 |
240,000 |
|
Cash collected from 2011 sales |
640,000 |
a. Compute the net income for 2011, assuming use of the accrual (sales) basis of revenue recognition.
b. Compute the net income for 2011, assuming use of the installment basis of recognizing gross margin.