Income recognition when collection from the customer is uncertain. Furniture Retailers sells furniture to customers who have relatively poor credit quality, offering extended payment terms. In January 2008, 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, 2008. The cost of the furniture to Furniture Retailers is $6,800. Furniture Retailers classifies Deferred Gross Margin as a liability on its balance sheet. Ignore any interest on unpaid accounts receivable. What journal entries will Furniture Retailers make (1) at the time of sale in January 2008, and (2) when it receives each monthly payment from the customer under each of the following methods of recognizing income:

a. Installment method.

b. Cost recovery method.