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I have answers for 2a. #1-3; need 2b. answered based on 2a.: 2b. What income would you report for 2008? Why? Support your answer with reference to appropriate FASB's rules.

2.a.Prepare three income statements for the year assuming that revenue is to be recognized when:

1. Crocodiles have been caught (i.e. production complete).

Crocodiles have been caught
Income Statements for Pet imports Inc for the year ended 31 Dec 2008
Particulars	Amount
Revenues	$500,000.00
Less : cost of production (catching crocodiles)	-$300,000.00
Gross Margin	$200,000.00
Less : shipping costs per crocodile	-$25,000.00
Less : collection costs & bad debts	-$100,000.00
Less : monthly warehouse rent	-$24,000.00
Less : monthly office rent	-$12,000.00
Net income	$39,000.00

2. Crocodiles have been sold and delivered

Crocodiles have been sold and delivered
Income Statements for Pet imports Inc for the year ended 31 Dec 2008
Particulars	Amount
Revenues	$300,000.00
Less: cost of production (catching crocodiles)	-$180,000.00
Gross Margin	$120,000.00
Less: shipping costs per crocodile	-$15,000.00
Less: collection costs & bad debts	-$60,000.00
Less: monthly warehouse rent	-$24,000.00
Less: monthly office rent	-$12,000.00
Net income	$9,000.00

3. Cash collections are complete

Cash collections are complete
Income Statements for Pet imports Inc for the year ended 31 Dec 2008
Particulars	Amount
Revenues	$200,000.00
Less: cost of production (catching crocodiles)	-$120,000.00
Gross Margin	$80,000.00
Less: shipping costs per crocodile	-$10,000.00
Less: collection costs & bad debts	-$40,000.00
Less: monthly warehouse rent	-$24,000.00
Less: monthly office rent	-$12,000.00
Net income	-$6,000.00

2b. What income would you report for 2008? Why? Support your answer with reference to appropriate FASB's rules.

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