only answer 5-2 please

Problem 5-2

Compute net income assuming revenues are recognized at time of sale and then assuming installment basis is used (L.O. 2)

Ramirez Video, Inc., sells video production equipment under terms calling for a small down payment and monthly payments spread over three years. Following are data for the first three years of the companys operations:

2010 2011 2012

GROSS MARGIN RATE 30% 40% 50%

CASH COLLECTED IN 2012:

FROM SALES IN 216,000

FROM SALES IN 288,000

FROM SALES IN 480,000

Total sales for 2012 were $1,600,000, while general and selling expenses amounted to $400,000.

a. Compute net income for 2012, assuming revenues are recognized at the time of sale.

b. Compute net income for 2012, using the installment method of accounting for sales and gross margin.