ACC301-sol-ch08

ACC301-sol-ch08 - PRACTICE EXERCISES PRACTICE 8-1 BASIC...

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PRACTICE EXERCISES PRACTICE 8 - 1 BASIC JOURNAL ENTRIES FOR REVENUE RECOGNITION 1. Cash 1,000 Unearned Service Revenue 1,000 2. Unearned Service Revenue 1,000 Service Revenue 1,000 PRACTICE 8 - 2 JOURNAL ENTRIES FOR A CONSIGNMENT 1. Inventory on Consignment 10,000 Inventory 10,000 2. Accounts Receivable 16,000 Sales 16,000 Cost of Goods Sold 10,000 Inventory on Consignment 10,000 PRACTICE 8 - 3 JOURNAL ENTRIES FOR A LAYAWAY 1. Cash (2  ×  $50) 100 Deposits Received from Customers 100 2. Cash 300 Deposits Received from Customers 50 Sales 350 Cost of Goods Sold 200
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Inventory 200 3. Deposits Received from Customers 50 Revenue from Layaway Forfeitures 50
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PRACTICE 8 - 4 JOURNAL ENTRIES FOR AN UP-FRONT, NONREFUNDABLE FEE 1. Cash (200  ×  $360) 72,000 Unearned Initial Sign-up Fees 72,000 2. Cash (200  ×  $50) 10,000 Monthly Service Revenue 10,000 3. Unearned Initial Sign-up Fees ($72,000/36 months)2,000 Initial Sign-up Fee Revenue 2,000 PRACTICE 8 - 5 JOURNAL ENTRIES FOR AN UP-FRONT, REFUNDABLE FEE 1. Cash (1,500  ×  $1,000) 1,500,000 Customers’ Refundable Fees (30%) 450,000 Unearned Membership Fees (70%) 1,050,000 2. Unearned Membership Fees ($1,050,000/12 months)87,500 Membership Fee Revenue 87,500 Cost of Membership Fee Revenue (70%) 10,500 Administrative Expense (30%) 4,500 Cash [($120/12 months)  ×  1,500 customers] 15,000 3. Unearned Membership Fees ($1,050,000/12 months)87,500 Membership Fee Revenue 87,500 Cost of Membership Fee Revenue (70%) 10,500 Administrative Expense (30%) 4,500 Cash [($120/12 months)  ×  1,500 customers] 15,000 Customers’ Refundable Fees 450,000 Cash 450,000 PRACTICE 8 - 6 JOURNAL ENTRIES FOR CONTINGENT RENT
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1. Cash 40,000 Rent Revenue 40,000 2. Cash 40,000 Rent Revenue 40,000 Contingent Rent Receivable 100,000 Contingent Rent Revenue 100,000 ($55,000,000  -  $50,000,000)  ×  0.02 = $100,000
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PRACTICE 8 - 6 (Concluded) 3. Cash 40,000 Rent Revenue 40,000 Contingent Rent Receivable 240,000 Contingent Rent Revenue 240,000 $12,000,000  ×  0.02 = $240,000 Cash 600,000 Contingent Rent Receivable 600,000 ($80,000,000  -  $50,000,000)  ×  0.02 = $600,000 PRACTICE 8 - 7 REPORTING REVENUE GROSS AND NET 1. Cash ($300,000  ×  0.02) 6,000 Commission Revenue 6,000 2. Cash 300,000 Sales 300,000 Cost of Goods Sold 210,000 Inventory 210,000 Commission Expense 6,000 Cash 6,000 PRACTICE 8 - 8 COST-TO-COST METHOD 1. Percentage of completion: [$100,000/($100,000 + $450,000)] = 18.182% Cumulative revenue to be recognized: $800,000  ×  0.18182 $145,456 Revenue recognized in previous years              0 Revenue to be recognized in Year 1 $145,456 2.
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Percentage of completion: [($100,000 + $150,000)/($100,000 + $150,000 + $280,000)] =  47.170% Cumulative revenue to be recognized: $800,000  ×  0.47170 $377,360 Revenue recognized in previous years   145,456
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ACC301-sol-ch08 - PRACTICE EXERCISES PRACTICE 8-1 BASIC...

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