Chapter 5 recommended end of chapter problemsWord文档下载推荐.docx
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OnNovember6,2011,JakeLawsonpurchasedaseasonticket.
Required:
1.
WhenshouldAlpineWestrecognizerevenuefromthesaleofitsseasonpasses?
2.
PreparetheappropriatejournalentriesthatAlpinewouldrecordonNovember6andDecember31.
3.
Whatwillbeincludedinthe2011incomestatementand2011balancesheetrelatedtothesaleoftheseasonpasstoJakeLawson?
E5-4
Installmentsales;
alternativerecognitionmethods
LO2
OnJuly1,2011,theFosterCompanysoldinventorytotheSlateCorporationfor$300,000.Termsofthesalecalledforadownpaymentof$75,000andthreeannualinstallmentsof$75,000dueoneachJuly1,beginningJuly1,2012.Eachinstallmentalsowillincludeinterestontheunpaidbalanceapplyinganappropriateinterestrate.TheinventorycostFoster$120,000.Thecompanyusestheperpetualinventorysystem.
Computetheamountofgrossprofittoberecognizedfromtheinstallmentsalein2011,2012,2013,and2014usingpointofdeliveryrevenuerecognition.Ignoreinterestcharges.
Repeatrequirement1applyingtheinstallmentsalesmethod.
Repeatrequirement1applyingthecostrecoverymethod.
E5-6
Installmentsalesandcostrecoverymethods;
solveforunknowns
WolfComputerCompanybeganoperationsin2011.Thecompanyallowscustomerstopayininstallmentsformanyofitsproducts.Installmentsalesfor2011were$1,000,000.Ifrevenueisrecognizedatthepointofdelivery,$600,000ingrossprofitwouldberecognizedin2011.Ifthecompanyinsteadusesthecostrecoverymethod,$100,000ingrossprofitwouldberecognizedin2011.
Whatwastheamountofcashcollectedoninstallmentsalesin2011?
Whatamountofgrossprofitwouldberecognizedifthecompanyusestheinstallmentsalesmethod?
E5-11
Percentage-of-completionmethod;
lossprojectedonentireproject
LO4
OnFebruary1,2011,ArrowConstructionCompanyenteredintoathree-yearconstructioncontracttobuildabridgeforapriceof$8,000,000.During2011,costsof$2,000,000wereincurredwithestimatedcostsof$4,000,000yettobeincurred.Billingsof$2,500,000weresentandcashcollectedwas$2,250,000.
In2012,costsincurredwere$2,500,000withremainingcostsestimatedtobe$3,600,000.2012billingswere$2,750,000and$2,475,000cashwascollected.Theprojectwascompletedin2013afteradditionalcostsof$3,800,000wereincurred.Thecompany'
sfiscalyear-endisDecember31.Arrowusesthepercentage-of-completionmethod.
Calculatetheamountofgrossprofitorlosstoberecognizedineachofthethreeyears.
Preparejournalentriesfor2011and2012torecordthetransactionsdescribed(creditvariousaccountsforconstructioncostsincurred).
PrepareapartialbalancesheettoshowthepresentationoftheprojectasofDecember31,2011and2012.
E5-12
Completedcontractmethod;
[ThisisavariationofExercise5-11focusingonthecompletedcontractmethod.]
p.278
sfiscalyear-endisDecember31.Arrowusesthecompletedcontractmethod.
E5-13
Income(loss)recognition;
percentage-of-completionandcompletedcontractmethodscompared
BradyConstructionCompanycontractedtobuildanapartmentcomplexforapriceof$5,000,000.Constructionbeganin2011andwascompletedin2013.Thefollowingareaseriesofindependentsituations,numbered1through6,involvingdifferingcostsfortheproject.Allcostsarestatedinthousandsofdollars.
Copyandcompletethefollowingtable.
Problem:
P5-4
Installmentsalesandcostrecoverymethods
MulcaheyBuilders(MB)remodelsofficebuildingsinlow-incomeurbanareasthatareundergoingeconomicrevitalization.MBtypicallyacceptsa25%downpaymentwhentheycompleteajobandanotewhichrequiresthattheremainderbepaidinthreeequalinstallmentsoverthenextthreeyears,plusinterest.Becauseoftheinherentuncertaintyassociatedwithreceivingthesepayments,MBhashistoricallyusedthecostrecoverymethodtorecognizerevenue.
AsofJanuary1,2011,MB'
soutstandinggrossinstallmentaccountsreceivable(notnetofdeferredgrossprofit)consistofthefollowing:
$400,000duefromtheBluebirdMotel.MBcompletedtheBluebirdjobin2009,andestimatedgrossprofitonthatjobis25%.
$150,000duefromthePitStopGasandMiniMart.MBcompletedthePitStopjobin2008,andestimatedgrossprofitonthatjobis35%.
DanMulcaheyhasbeenconsideringswitchingfromthecostrecoverymethodtotheinstallmentsalesmethod,becausehewantstoshowthehighestpossiblegrossprofitin2011andheunderstandsthattheinstallmentsalesmethodrecognizesgrossprofitsoonerthandoesthecostrecoverymethod.
Calculatehowmuchgrossprofitisexpectedtobeearnedonthesejobsin2011underthecostrecoverymethod,andhowmuchwouldbeearnedifMBinsteadusedtheinstallmentsalesmethod.Ignoreinterest.
IfDanisprimarilyconcernedabout2011,doyouthinkhewouldbehappywithaswitchtotheinstallmentsalesmethod?
Explain.
P5-5
Percentage-of-completionmethod
In2011,theWestgateConstructionCompanyenteredintoacontracttoconstructaroadforSantaClaraCountyfor$10,000,000.Theroadwascompletedin2013.Informationrelatedtothecontractisasfollows:
Westgateusesthepercentage-of-completionmethodofaccountingforlong-termconstructioncontracts.
Calculatetheamountofgrossprofittoberecognizedineachofthethreeyears.
Prepareallnecessaryjournalentriesforeachoftheyears(creditvariousaccountsforconstructioncostsincurred).
Prepareapartialbalancesheetfor2011and2012showinganyitemsrelatedtothecontract.
4.
Calculatetheamountofgrossprofittoberecognizedineachofthethreeyearsassumingthefollowingcostsincurredandcoststocompleteinformation:
p.286
5.
P5-6
Completedcontractmethod
[ThisisavariationofProblem5-5modifiedtofocusonthecompletedcontractmethod.]
CompletetherequirementsofProblem5-5assumingthatWestgateConstructionusesthecompletedcontractmethod.
P5-8
Constructionaccounting;
lossprojectedonentireproject
CurtissConstructionCompany,Inc.,enteredintoafixed-pricecontractwithAxelrodAssociatesonJuly1,2011,toconstructafour-storyofficebuilding.Atthattime,Curtissestimatedthatitwouldtakebetweentwoandthreeyearstocompletetheproject.Thetotalcontractpriceforconstructionofthebuildingis$4,000,000.Curtissappropriatelyaccountsforthiscontractunderthecompletedcontractmethodinitsfinancialstatements.ThebuildingwascompletedonDecember31,2013.Estimatedpercentageofcompletion,accumulatedcontractcostsincurred,estimatedcoststocompletethecontract,andaccumulatedbillingstoAxelrodunderthecontractwereasfollows:
Prepareschedulestocomputegrossprofitorlosstoberecognizedasaresultofthiscontractforeachofthethreeyears.
AssumingCurtissusesthepercentage-of-completionmethodofaccountingforlong-termconstructioncontracts,computegrossprofitorlosstoberecognizedineachofthethreeyears.
Assumingthepercentage-of-completionmethod,computetheamounttobeshowninthebalancesheetattheendof2011and2012aseithercostinexcessofbillingsorbillingsinexcessofcosts.
CPAExamQuestions
ThefollowingquestionsareusedintheKaplanCPAReviewCoursetostudyrevenuerecognitionwhilepreparingfortheCPAexamination.Determinetheresponsethatbestcompletesthestatementsorquestions.
OnOctob
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