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Exam 2 sol

# Exam 2 sol - MGT 340 DL EXAM 2 CHAPTERS 5 7 8 NAME General...

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MGT 340 DL EXAM 2 CHAPTERS 5, 7, & 8 NAME __________________________ General Instructions: You MUST SHOW ALL CALCULATIONS in order to receive full credit. You MUST complete the exam with no help from classmates or anyone else. Problem 1 The Brooks’ Construction Company began work on a three year contract in 2005. The contract price is \$4,000,000, and the company uses the percentage-of-completion method. Other information relating to the contract is as follows: 2005 2006 2007 Costs incurred during the year 1,600,000 1,800,000 1,100,000 Estimated costs to complete at December 31 2,000,000 800,000 0 Billings during the year 1,500,000 1,800,000 700,000 Collections during the year 1,250,000 1,400,000 1,350,000 A. Compute the gross profit or loss to be recognized in 2007. SHOW ALL CALCULATIONS. Round all percents to 4 decimal places. B. Prepare the following journal entries for the year 2006: a. To record cost b. To record the billing c. To record collection d. To record the profit or loss C. Prepare a partial balance sheet as of year end 2006 for this contract. D. How much revenue and gross profit would the company recognize in 2007 if it had used the completed contract method?

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