Transistor Electronics makes all of its sales on credit and accounts for them using the installment sales method. For simplicity, assume that all sales occur on the first day of the year and that all cash collections are made on the last day of the year. Transistor Electronics charges 18% interest on the unpaid installment balances. Data for Year 1 and Year 2 are as follows:

Prepare all necessary journal entries for
(1) Year 1 and
(2) Year2.

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Year 1 Year 2 Sales Cost of goods sold Cash collections (principal and interest): $200,000 110,000 $220,000 130,000 From Year sales .. From Year 2 sales -. 90,000 100,000 100,000