On January 1, 2014, Heinkel Corporation€™s balance sheet consisted of $900,000 in cash and $900,000 in equity. On this date, Heinkel began production of an electronic device for improving the sound quality of CDs. During 2014, Heinkel produced 100,000 devices at a unit cost of $12. These devices had a selling price of $20 each and were to be sold on account to various dealers in the northeastern United States. Commissions and other selling costs incurred at the time of sale were $1.00 per unit. During 2014, 2015, and 2016, the 100,000 units produced were sold and cash was collected as follows:

Required:
1. Calculate the amount of Heinkel€™s net income each year, assuming that revenue and gross profit are recognized:
a. At the completion of production.
b. At the point of sale.
c. As cash is collected (installment method).
2. Prepare Heinkel€™s journal entries for 2014 under each of the methods in requirement1.

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2014 2015 2016 Units sold Cash collections $1,000,000 $800,000 $200,000 60,000 40,000