Chapter_18_Solutions

Chapter_18_Solutions - E181 (a) Because the books are sold...

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E18-1 (a) Because the books are sold f.o.b. shipping point, Uddin could recognize revenue at the point of sale based on when the shipment is made. Since there is a return policy, one could recommend a cash collection basis. But, because returns are estimable, shipping point less estimated returns could be seen as viable as well. (b) based on the given information, I would recommend reporting revenue at the time of shipment at the gross amount less the 12% estimated returns This would be the GAAP-compliant method (c) Accounts Receivable 15,000,000 Book Sales 15,000,000 Sales Returns (15,000,000*.12) 1,800,000 Allowance for Sales Returns 1,800,000 (d) Sales returns 200,000 Allowance for Sales Returns 1,800,000 Accounts Receivable 2,000,000 Cash 13,000,000 Accounts Receivable 13,000,000
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E18-2 (a) (1) 3-Jun Accounts Receivable - Ann Mount 8,000 Sales 8,000 5-Jun Sales Returns and Allowances 600 Accounts Receivable - Ann Mount 600 7-Jun Transportation-Out 24 Cash 24 12-Jun Cash 7,252 Sales Discounts (.02*7,400) 148 Accounts Receivable - Ann Mount 7,400 (2) 3-Jun Accounts Receivable - Ann Mount 7840 Sales 7840 5-Jun Sales Returns and Allowances 588 Accounts Receivable - Ann Mount 588 7-Jun Transportation-Out 24 Cash 24 12-Jun Cash 7252 Accounts Receivable 7252 (b) Cash 7400 Accounts Receivable 7252 Sales Discounts Forfeited 148
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P18-2 (a) percentage-of-completion method (b) completed  estimated gross profit recognized / yr. estimated g 2010 2010: $0 Costs incurred to date: 270,000 Estimated costs to complete: 330,000 2011: $0 Estimate of total costs: 600,000  $135,000  2012: Total revenue: 900,000 Estimate of total costs: 600,000 Estimated total gross profit: 300,000 2011 Costs incurred to date: 450,000 Estimated costs to complete: 150,000 Estimate of total costs: 600,000  $90,000  Total revenue: 900,000 Estimate of total costs: 600,000 Estimated total gross profit: 300,000 2012 Total costs incurred 610,000 Total revenue 900,000 Total costs incurred 610,000 Total gross profit earned 290,000 Gross profit recognized in '10 135,000 Gross profit recognized in '11 90,000 Gross profit to be recognized in '12 -->  $65,000 
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 gross profit recognized / yr. Total revenue
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Chapter_18_Solutions - E181 (a) Because the books are sold...

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