course hero 18 - be exchanged and the manner and terms of...

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Business, Accounting/Business Analysis/Financial Reporting - Other Accounting problems and questions 1. An alternative available when the seller is exposed to continued risks of ownership through return of the product is Recording the sale, and accounting for returns as they occur in future periods. Not recording a sale until all return privileges have expired. Recording the sale, but reducing sales by an estimate of future returns. All of the above. . 2. The percentage-of-completion method must be used when certain conditions exist. Which of the following is NOT one of those necessary conditions? Estimates of progress toward completion, revenues, and costs are reasonably dependable. The contractor can be expected to perform the contractual obligation The buyer can be expected to satisfy some of the obligations under the contract. The contract clearly specifies the enforceable rights of the parties, the consideration to
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Unformatted text preview: be exchanged, and the manner and terms of settlement. 3. Mayer Company leased equipment from Lennon Company on July 1, 2008, for an eight-year period expiring June 30, 2016. Equal annual payments under the lease are $300,000 and are due on July 1 of each year. The first payment was made on July 1, 2008. The rate of interest contemplated by Mayer and Lennon is 8%. The cash selling price of the equipment is $1,861,875 and the cost of the equipment on Lennon's accounting records was $1,650,000. Assuming that the lease is appropriately recorded as a sale for accounting purposes by Lennon, what is the amount of profit on the sale and the interest income that Lennon would record for the year ended December 31, 2008? $0 and $0 $0 and $62,475 $211,875 and $62,475 $211,875 and $74,475...
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This note was uploaded on 04/23/2010 for the course BUS 165 C Business 1 taught by Professor Michaelmoore during the Spring '10 term at UC Riverside.

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