Assignment Problem: Income recognition when collection from the customer is uncertain. Retailers sells furniture to retail customers, offering extended payment terms. In January 2013, a customer buys a full set of dining room and living room furniture for $8,400 on an installment plan, with no down payment and monthly payments of $400, beginning January 31, 2013. The cost of the furniture to Retailers is $6,800. Retailers classify - Deferred Gross Margin as a liability on its balance sheet. Ignore interest on unpaid accounts receivable.
What journal entries will Retailers make at the time of sale in January 2013 and (2) when it receives each monthly payment from the customer under each of the following methods of recognizing revenue:
a. Installment method.
b. Cost recovery method.
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