Furniture Retailers sells furniture to retail customers, offering extended payment terms. In January 2013, 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, 2013. 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 interest on unpaid accounts receivable. What journal entries will Furniture Retailers make (1) at the time of sale in January 2013 and (2) when it receives each monthly payment from the customer under of the method of recognizing revenue:

Cost recovery method.

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