ch07bb - CHAPTER 7 Revenue Recognition ASSIGNMENT...

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CHAPTER 7 Revenue Recognition ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems * 1. Realization and recognition; sales transactions, high rates of return. 1, 2, 3, 4, 1 1 * 2. Long-term contracts. 5, 6, 7, 8, 9 2, 3, 4 1, 2, 3, 4, 5, 6 1, 2, 3, 4, 5, 8, 9, 10 * 3. Installment sales. 10, 11, 12, 14, 15 5, 6 7, 8, 9 1, 6, 7 * 4. Cost recovery, deposit methods. 11, 12, 13, 16, 17 7 8, 9, 10 *5. Entries for long-term contracts. 18 8, 9 11, 13 11 *6. Entries for installment sales. 10 12, 14, 15 12, 13, 14 *This material is dealt with in the Appendix to the chapter. 7-1
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ASSIGNMENT CLASSIFICATION TABLE (BY LEARNING OBJECTIVE) Learning Objectives Brief Exercises Exercises Problems * 1. Apply the revenue recognition principle. 1, 2, 3, 4, 5, 6, 7 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 1, 2, 3, 4, 5, 6, 7, 8, 9 * 2. Describe accounting issues involved with revenue recognition at point of sale. 1, 2 13, 14, 15 1, 10 * 3. Apply the percentage-of-completion method for long-term contracts. 2, 4 1, 2, 3, 4, 5, 13 1, 2, 3, 4, 5, 9, 10 * 4. Apply the completed-contract method for long-term contracts. 3, 4 1, 4, 5, 6 1, 2, 5, 8, 9, 10 5. Describe the installment-sales and cost-recovery methods of accounting. 5, 6, 7 6, 7, 8, 9, 10, 14, 15 1, 6, 7 *6. Prepare the journal entries to record long-term contracts. 8, 9 11, 13 11 *7 Prepare the journal entries to record installment sales. 10 12, 14, 15 12, 13, 14 *This material is discussed in the Appendix to the chapter. 7-2
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ANSWERS TO QUESTIONS 1. Revenue is conventionally recognized at the date of sale. For revenue to be recognized at the date of sale, (1) the amount of the revenue should be reasonably measurable—that is, the collecti- bility of the sales price is reasonably assured or the amount uncollectible can be reasonably estimated—and (2) the earnings process is complete or virtually complete (realized or realizable) —that is, the seller is not obligated to perform significant activities after the sale to earn the revenue. 2. Revenues are recognized generally as follows: (a) Revenue from selling products—date of delivery to customers. (b) Revenue from services rendered—when the services have been performed and are billable. (c) Revenue from permitting others to use enterprise assets—as time passes or as the assets are used. (d) Revenue (gains) from disposing of assets other than products—at the date of sale. 3. Types of sales transactions: (1) Cash sale. (2) Credit sale. (3) C.O.D. sale. (4) Will-call or layaway sale. (5) Sale in advance of delivery (long-term construction). (6) Branch sale. (7) Intercompany sale. (8) Installment sale. The student should identify for each type of sale a form of business which typically engages in that type of sale. Many of these sales transactions are not mentioned in this chapter, so the student will probably not identify all these transactions. 4.
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ch07bb - CHAPTER 7 Revenue Recognition ASSIGNMENT...

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