Point-of-sale versus installment method of income recognition. The J. C. Spangle catalog division began business on January 1, 2007. Activity of the company for the first tow year are as follows:

a. Prepare income statements for 2007 and 2008, assuming that the company uses the accrual basis of accounting and recognizes revenue at the time of sale.
b. Prepare income statements for 2007 and 2008, assuming that the company uses the accrual basis of accounting and recognizes revenue at the time of cash collection following the installment method of accounting. "All Expenses Other Than Merchandise, Paid in Cash" are periodexpenses.

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2008 2007 Sales, All on Account.. Collections from Customers: On 2007 Sales On 2008 Sales Purchase of Merchandise Inventory of Merchandise at 12/31 AlL Expenses Other Than Merchandise, Paid in Cash.. $300,000 $200,000 110,000 90,000 120,000 180,000 114,000 44,000 60,000 32,000