A3. (Revenue recognitioninstallment sales) The Garcia Corp. is a real estate developer. In Year 1, it sold a house to Michael Sukul for $200,000, in return for five yearly installments of $40,000 each, plus interest. The first installment was paid at the time of sale. The house cost Garcia $115,000 to build. Compute the revenue and cost of sales that Garcia would recognize each year from Year 1 to Year 5 if it used:

a. Immediate recognition at time of sale

b. The installment method

c. The cost recovery method