During its first year, the company spent approximately $300,000 to catch 500 crocodiles. Of these, 300 crocodiles were sold and shipped to customers at a selling price of $1,000 per crocodile. Shipping costs of $50 per crocodile were paid for during the year. Customers were given liberal credit terms and only $160,000 from an equivalent 200 customers was collected during the first year. Ms. La Femme estimated that as much as 20% of the sales price will be spent in collection costs and bad debts expenses.
Prepare three income statements for the year assuming that revenue is to be recognized when:
a. Crocodiles have been caught (i.e. production complete).
b. Crocodiles have been sold and delivered
c. Cash collections are complete