The Oyster Bay Sales Companys statement of financial position on January 1, 2011, reported the following :

Cash Merchandise inventories Accounts receivable, regular Installment contract receivable-2009 Installment contract receivable-2010 Various assets

$ 20,000 120,000 10,000 30,000 70,000 100,000 ________ $ 350,000

Accounts payable Unrealized gross profit on installment sales 2009 Unrealized gross profit on installment Sales 2010 Capital stock Earned surplus

$ 30,000 12,000 29,400 203,000 75,600 $ 350,000

Transactions during 2011 were summarized :

Sales

Regular (on credit) $ 300,000

Installment 100,000

Purchases of merchandise (cash) 238,000

Merchandise inventory, December 31, 2011 130,000

Cost of installment sales 57,000

Selling expenses 105,000

Collections on installment contract receivables

2009 installment contact receivables 20,000

2010 installment contact receivables 40,000

2011 installment contact receivables 55,000

Collections on regular accounts 280,000

Required :

1. Compute gross profit rates for 2009, 2010, 2011, installment sales.

2. Prepare journal entries for 2011, including adjusting and closing entries at December 31, 2011.

3. Prepare an income statement for 2011.