43048510-A-Construction-Company-Entered-Into-a-Fixed - A...

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A construction company entered into a fixed-price contract to build an office building for $23.0 million. Construction costs incurred during the first year were $7.1 million and estimated costs to complete at the end of the year were $9 million. The building was completed during the second year. Construction costs incurred during the second year were $10.4 million. How much gross profit will the company recognize in the first year and in the second year applying the completed contract method? (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers in dollars not in millions. Omit the "$" sign in your response.)
Charter Corporation, which began business in 2011, appropriately uses the installment sales method of accounting for its installment sales. The following data were obtained for sales made during 2011 and 2012: 2011 2012 Installment sales $ 364,00 0 $ 347,00 0 Cost of installment sales 231,00 0 245,00 0 Cash collections on installment sales during: 2011 152,00 0 104,00 0 2012 121,00 0 Required: (1) How much gross profit should Charter recognize in 2011 and 2012 from installment sales? (Round Gross Profit percentages to the nearest whole percentage. Omit the "$" sign in your response.)
Gross Profit 2011 $ 56,240 2012 $ 73,570 (2) What should be the balance in the deferred gross profit account at the end of 2011 and 2012? (Round Gross Profit percentages to the nearest whole percentage. Omit the "$" sign in your response.)
(2) 2011 deferred gross profit balance: 2011 initial gross profit ($364,000 – 231,000) $ 133,000 Less: Gross profit recognized in 2011 (56,240) Balance in deferred gross profit account $ 76,760 2012 deferred gross profit balance: 2011 initial gross profit ($364,000 – 231,000) $ 133,000 Less: Gross profit recognized in 2011 (56,240) Gross profit recognized in 2012 (38,480) 2012 initial gross profit ($347,000 – 245,000) 102,000 Less: Gross profit recognized in 2012 (35,090) Balance in deferred gross profit account $ 105,190 On July 1, 2011, the Foster Company sold inventory to the Slate Corporation for $300,000. Terms of the sale called for a down payment of $75,000 and three annual installments of $75,000 due on each July 1, beginning July 1, 2012. Each installment also will include interest on the unpaid balance applying an appropriate interest rate. The inventory cost Foster $120,000. The company uses the perpetual inventory system. Required: (1) Prepare the necessary journal entries for 2011 and 2012 using point of delivery revenue recognition. Ignore interest charges. (Omit the "$" sign in your response.)
July 1, 2012 To record cash collection from installment sale Cash 75,000 Installment receivables 75,000

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