accounting problems
1. (TCO A) Platypus
Building Inc. won a bid for a new office building contract. Below is info from
the project accountant:
Total
Construction Fixed Price $8,000,000
Construction
Start Date March 3,
2012
Construction
Complete Date December 4,
2013
As
of Dec 31… 2012 2013
Actual
cost incurred $2,500,000 $3,150,000
Estimated
remaining costs $3,750,000 $-
Billed
to customer $2,400,000 $5,300,000
Received
from customer $2,250,000 $5,400,000
Assuming Platypus
Building Inc. uses the completed contract method, what amount of gross profit
would be recognized in 2013?
1.
$2,000,000
2.
$2,350,000
3.
$1,650,000
4.
$940,000
2. (TCO A) Kerry Corp purchased a used bottling machine from Bob's Bottling
Inc. on Jan 1, 2012 for $2,100,000. Bob accounted for the sale correctly under
the installment sales method. It had a book value of $1575000. Kerry paid with
$300000 cash and a note for $1800000 with an annual interest of 10%. Kerry
agreed to make equal annual payments of $600000. Kerry Corp made their first
payment on Jan 1, 2013 of $780000 which included interest of $180000 to date of
payment.
As
of Dec 31, 2013 Bob has deferred gross profit of ?
1.
$255,000
2.
$330,000
3.
$375,000
4. $300,000
3. (TCO A) Blue Suede Construction Corp used the percentage-of-completion method of revenue recognition. They were contracted to build the new amphitheater for $800000. Additional information was provided:
As
of Dec 31…. 2012
2013
Percentage
of completion 15% 40%
Estimated
total expected costs $550,000 $580,000
Gross
profit recognized (Cumulative) $50,000 $99,000
Contracted
costs incurred during 2013 were… (Points
: 5)
1.
$145,000
2. $149,500
3.
$151,000
4.
$232,000
4. (TCO A) In industries with high rates of return (such as a magazine distribution company) an alternative method of revenue recognition would be
•
record sales net of an estimate of expected future returns
•
record sales in current period and returns in future periods as they occur
• do not record any sales until
expiration of all return privileges have passed
•
all of the above
-
Rating:
/5
Solution: accounting problems