Question 1: A company incurred the following costs and received the following collections from customers

	Costs	Collections
2001	$120,000	-0-
2002	20,000	$ 80,000
2003	20,000	$ 40,000
2004	10,000	$100,000
2005	-0-	$ 8,000

(a) If the company used the cost recovery method of revenue recognition, the income that should be recognized in 2003 is ___________________ (show your calculation).

(b) If the cost recovery method continues to be used through 2004, the amount of 2004 income that should be recognized is ____________________ (show your calculation).

Question 2. A corporation, which began business on January 1, 2006, appropriately uses the instalment sales method of reporting for accounting purposes. The following data were available for the years 2006 and 2007:

	2006	2007
Instalment sales.........................	$1,050	$1,260
Cost of instalment sales.................	840	945
Cash collected on 2006 instalment sales..	450	375
Cash collected on 2007 instalment sales..		600

What should be the balance in the deferred gross profit account on December 31, 2007?