Potter's Home Goods sells furniture and electronic items. The majority of its business is on credit, and the following information is available relating to sales transactions for 2010, 2011, and 2012.

Instructions: Prepare the journal entries for the years 2010–2012 assuming Potter's uses the installment sales method for revenue recognition and records receivables net ofinterest.

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2010 2011 2 Installment sales (net of interest) Gross profit percentage Cash collections on installment sales $124,000 $138,000 145,000 36% $38.200 65.400 $18,500 33.700 73.450 250 15.600 6.400 $59,300 Principal-2012 12.400 6,150 7.100 Interest-2012