Part B. Electro Co. recently developed an incentive scheme that allows customers to defer payments to boost sales. On May 1, 2018, a customer signed a purchase agreement with Electro Co. for a television. The television had a list price of $10,000, which represents the price the customer had to pay if full-payment would be made on the purchase date.

The contract permitted the customer to return the television within 3 months, and Electro Co. did not have past experience regarding the return rate of the television.

After the expiration of the return period, the customer paid Electro Co. $5,500 on April 30, 2019 and $5,250 on April 30, 2020. The interest rate charged by Electro Co. is 5% per annum.

The television had a cost of $4,000. Electro Co. has a fiscal year-end of April 30.

(a)Can Electro Co. recognize sales revenue on May 1, 2018? Why? (2')

(b)Please provide the journal entries related to this sales transaction for Electro Co. Please clearly denote the dates of each journal entry. (7')