Ramirez Video, Inc., sells video recorders 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 company's operations:

Total sales for 1999 were \(\$ 1,600,000\), while general and selling expenses amounted to \(\$ 400,000\).

a. Compute net income for 1999 , assuming revenues are recognized at the time of sale.

b. Compute net income for 1999 , using the installment method of accounting for sales and gross margin.

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1997 1998 1999 Gross margin rate 30% 40% 50% Cash collected in 1999: From sales in.. $216,000 From sales in $288,000 From sales in.. $480,000