Answer:
increase in income = $18736
Explanation:
solution
we consider here 2 case 
case 1 is
Credit Sales with bad debt estimation @ 2.2%
and 
Case 2 is 
Cash Sales only
so as in both the cases we are indifferent towards cash sales of $135000 as Gilmore would earn the same margin and there is no bad debt scenario.
so in case 1  gross margin is  
Gross Margin = 20% of 512000 
Gross Margin  = $102400
and 
Bad Debt Estimation @ 2.2% is  = $11264
so Net Margin =  $102400  -$11264  = 
Net Margin =  $91136
and
in case 2 is 
as company have gone for all cash sales then it will able to sell $150000 less
so cash Sales =  512000 – 150000 
cash Sales = $362000    
and 
Margin = 20% of 362000 
Margin = $ 72400
so that  increase in income from operations by selling on credit is 
increase in income from operations by selling on credit = 91136 - 72400 
increase in income = $18736