6 Pages

# Chap005

Course Number: ACCOUNTING 425, Fall 2011

College/University: Franklin

Word Count: 641

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Student Name: Instructor Class: McGraw-Hill/Irwin Problem 05-02 Requirement 1: 2011 Cost recovery %: \$180,000 \$300,000 = 60% Gross profit % = 40% Correct! = 70% Gross profit % = 30% Correct! = \$120,000 X 40% = \$48,000 Correct! = = \$100,000 \$150,000 X X 40% 30% = = \$40,000 45,000 \$85,000 Correct! 2012 Cost recovery %: \$280,000 \$400,000 2011 Gross Profit: Cash collection from 2011 sales 2012...

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Name: Student Instructor Class: McGraw-Hill/Irwin Problem 05-02 Requirement 1: 2011 Cost recovery %: \$180,000 \$300,000 = 60% Gross profit % = 40% Correct! = 70% Gross profit % = 30% Correct! = \$120,000 X 40% = \$48,000 Correct! = = \$100,000 \$150,000 X X 40% 30% = = \$40,000 45,000 \$85,000 Correct! 2012 Cost recovery %: \$280,000 \$400,000 2011 Gross Profit: Cash collection from 2011 sales 2012 Gross Profit: Cash collection from 2011 sales Cash collection from 2012 sales Total 2012 gross profit Requirement 2: Date Account 2011 To record installment sales Installment receivables Inventory Deferred gross profit Debit Credit 300,000 Correct! 180,000 120,000 2011 To record cash collections from installment sales Cash Installment receivables 2011 To recognize gross profit from installment sales Deferred gross profit Realized gross profit 2012 To record installment sales Installment receivables Inventory Deferred gross profit 120,000 120,000 Correct! 48,000 48,000 Correct! 400,000 Correct! 280,000 120,000 2012 To record cash collections from installment sales Cash Installment receivables 2012 To recognize gross profit from installment sales Deferred gross profit Realized gross profit 250,000 250,000 Correct! 85,000 85,000 Correct! Requirement 3: Date Cash Collected Cost Recovery Gross Profit 2011 2011 sales \$120,000 \$120,000 0 Correct! 2012 2011 sales 2012 sales 2012 totals \$100,000 150,000 \$250,000 \$60,000 150,000 \$210,000 \$40,000 0 \$40,000 Correct! Date Account 2011 To record installment sales Installment receivables Inventory Deferred gross profit 2011 To record cash collections from installment sales Cash Installment receivables 2012 To record installment sales Installment receivables Inventory Deferred gross profit 2012 To record cash collections from installment sales Cash Installment receivables 2012 To recognize gross profit from installment sales Deferred gross profit Realized gross profit Debit Credit 300,000 Correct! 180,000 120,000 120,000 120,000 Correct! 400,000 Correct! 280,000 120,000 250,000 250,000 Correct! 40,000 40,000 Correct! Given Data P05-02: AJAX COMPANY Installment Sales Sales Cost of sales Customer collections on: 2011 sales 2012 sales 2011 \$300,000 180,000 2012 \$400,000 280,000 120,000 100,000 150,000 Student Name: Instructor Class: McGraw-Hill/Irwin Problem 05-03 Requirement 1: SILVA COMPANY Gross Profit Recognized Total profit Installment sales method: Gross profit % Cash collections Point of delivery method Installment sales method Cost recovery method 8/31/2011 \$100,000 \$200,000 \$40,000 \$- \$200,000 40% 8/31/2012 \$100,000 \$\$40,000 \$- 8/31/2013 \$100,000 \$\$40,000 \$- 8/31/2014 \$100,000 \$\$40,000 \$100,000 8/31/2015 \$100,000 \$\$40,000 \$100,000 Requirement 2: SILVA COMPANY General Journal Account Installment receivable Sales revenue Cost of goods sold Inventory Point of Delivery Debit Credit 500,000 500,000 300,000 300,000 Installment Sales Debit Credit Cost Recovery Debit Credit To record sale on 8/31/11. Installment receivable Inventory Deferred gross profit 500,000 500,000 300,000 200,000 300,000 200,000 To record sale on 8/31/11. Cash Installment received 100,000 100,000 100,000 100,000 100,000 100,000 Entry made each Aug. 31. Deferred gross profit Realized gross profit 40,000 40,000 Entry made each Aug. 31. Deferred gross profit Realized gross profit 100,000 100,000 Entry made 8/31/14 & 8/31/15. Requirement 3: SILVA COMPANY Partial Balance Sheet Point of Delivery Installment Sales Cost Recovery December 31, 2011 Assets Installment receivable Less deferred gross profit Installment receivables, net 400,000 400,000 160,000 240,000 400,000 200,000 200,000 December 31, 2012 Assets Installment deferred receivable Less gross profit Installment receivables, net 300,000 300,000 120,000 180,000 300,000 200,000 100,000 Given Data P05-03: SILVA COMPANY Merchandise sold Down payment Annual installments (4) Book value of merchandise \$500,000 \$100,000 \$100,000 \$300,000 Student Name: Instructor Class: McGraw-Hill/Irwin Problem 05-05 WESTGATE CONSTRUCTION COMPANY Requirement 1: Gross profit to be recognized Contract price Actual costs to date Estimated costs to complete Total estimated costs Estimated gross profit (loss) Gross profit (loss) recognition: 2011 \$10,000,000 2,400,000 5,600,000 8,000,000 \$2,000,000 Correct! 2012 \$10,000,000 6,000,000 2,000,000 8,000,000 \$2,000,000 Correct! 2013 \$10,000,000 8,200,000 8,200,000 \$1,800,000 Correct! 2011 \$600,000 Correct! 2012 \$900,000 Correct! 2013 \$300,000 Correct! Requirement 2: WESTGATE CONSTRUCTION COMPANY General Journal Account Construction in progress Various accounts 2011 Debit 2,400,000 2012 Debit 3,600,000 Credit 2,400,000 Credit 2013 Debit 2,200,000 3,600,000 Credit 2,200,000 To record construction costs. Accounts receivable Billings on construction contract To record progress billings. 2,000,000 Cash 1,800,000 4,000,000 4,000,000 3,600,000 1,800,000 Accounts receivable To record cash collections Construction in progress Cost of construction Rev. from long-term contracts To record gross profit. 4,000,000 2,000,000 4,600,000 3,600,000 600,000 2,400,000 900,000 3,600,000 3,000,000 4,500,000 WESTGATE CONSTRUCTION COMPANY Partial Balance Sheet 2011 2012 \$200,000 \$3,000,000 (2,000,000) \$600,000 \$7,500,000 (6,000,000) \$1,000,000 \$1,500,000 Requirement 4: Costs incurred during year Estimated cost to complete as of year-end Contract price Actual costs to date Estimated costs to complete Total estimated costs Estimated gross profit (loss) Gross profit (loss) recognition: 2011 \$2,400,000 2012 \$3,800,000 2013 \$3,200,000 5,600,000 3,100,000 - 2011 \$10,000,000 2,400,000 5,600,000 8,000,000 \$2,000,000 Correct! 2012 \$10,000,000 6,200,000 3,100,000 9,300,000 \$700,000 Correct! 2013 \$10,000,000 9,400,000 9,400,000 \$600,000 Correct! 2011 \$600,000 Correct! 2012 \$(133,333) Correct! 2013 \$133,333 Correct! 2011 \$2,400,000 2012 \$3,800,000 2013 \$3,900,000 5,600,000 4,100,000 - 2011 \$10,000,000 2,400,000 5,600,000 8,000,000 \$2,000,000 Correct! 2012 \$10,000,000 6,200,000 4,100,000 10,300,000 \$(300,000) Correct! 2013 \$10,000,000 10,100,000 10,100,000 \$(100,000) Correct! 2011 \$600,000 Correct! 2012 \$(900,000) Correct! 2013 \$200,000 Correct! Requirement 5: Costs incurred during year Estimated cost to complete as of year-end Contract price Actual costs to date Estimated costs to complete Total estimated costs Estimated gross profit (loss) Gross profit (loss) recognition: 4,600,000 300,000 2,200,000 Requirement 3: Current assets: Accounts receivable Construction in progress Less: Billings Costs and profit in excess of billings 4,000,000 2,500,000 Given Data P5-05: WESTGATE CONSTRUCTION COMPANY Contract information: Contract amount Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year \$10,000,000 2011 \$2,400,000 5,600,000 2,000,000 1,800,000 2012 \$3,600,000 2,000,000 4,000,000 3,600,000 2013 \$2,200,000 4,000,000 4,600,000 2012 \$3,800,000 3,100,000 2013 \$3,200,000 - 2012 \$3,800,000 4,100,000 2013 \$3,900,000 - Costs incurred and costs to complete information (Part 4): Costs incurred during the year Estimated costs to complete as of year-end 2011 \$2,400,000 5,600,000 Costs incurred and costs to complete information (Part 5): Costs incurred during the year Estimated costs to complete as of year-end 2011 \$2,400,000 5,600,000

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