Key - HW18 - + 720,000 (Installment sale in 2008)- 300,000...

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HW - Ch.18 Q1 - (a) 2006 2007 2008 % of Completion 10% 45% 100% Revenue 850,000 2,975,000 4,675,000 (=10%*8,500,000) (=45%*8,500,000 - 850,000) Expense 800000 3525000 ** 4,625,000 Profit (loss) 50,000 -550,000 * 50,000 2007 loss amount = Total expected loss of 500,000 (=8,500,000 - 9,000,000) - 50,000 (profit recogniz Journal entry 2007 Record cost: Dr. CIP 3,250,000 Cr. Cash 3,250,000 Billings: Dr. A/R 3,500,000 Cr. Billings on construction 3,500,000 Cash collection: Dr. Cash 3,000,000 Cr. A/R 3,000,000 Revenue/Expense: Dr. Expense 3,525,000 Cr. Revenue 2,975,000 CIP 550,000 (b) B/S Asset: A/R 800,000 (=4,000,000 - 3,200,000) Liability: Billings > CIP 450,000 (=4,000,000 - 3,550,000) I/s Revenue 2,975,000 Expense 3,525,000 Loss 550,000 Q3 (a) 2007 - profit = 340,000*0.18 + 580,000*0.2 = 177,200 (c) Cost recovery method 2007 profit = Cash collection > COGS = (340,000+340,000) - 615,000 (COGS of 2006 = 65,000 # No profit recognized from 2007 sales Q4 A/R - Installment sales - From 2007 sales and 2008 sales = 750,000 (Installment sale in 2007)
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Unformatted text preview: + 720,000 (Installment sale in 2008)- 300,000 (Cash collection in 2007)*- 300,000 (Cash collection in 2008 for 2007 sales)*- 60,000 (Cash collection in 2008 for 2008 sales)** = 810,000 (Ending balance of A/R in 2008) *Cash collection in 2007 = 72,000 (=180,000 of deferred gross profit amount - 108,000 of defer / Gross profit margin ratio of 2007 (=24%) = 72,000 / 0.24 = 300,000 * Cash collection in 2008 for 2007 sales = 72,000 (= 108,000 balance in 2008 - 36,000 of ending ba / Gross profit margin ratio of 2007 (=24%) = 72,000 / 0.24 = 300,000 ** Cash collection in 2008 for 2008 sales= 18,000 (= 216,000 of deferred gross profit amount - 198, for 2008 sales)/ Gross profit margin ratio of 2008 (=30%) = 18,000 / 0.3 = 60,000 *** zed in 2007) 6) rred gross profit ending balance in 2007) alance of deferred gross profit for 2007 sales) ,000 of ending balance of deferred gross profit )...
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This note was uploaded on 10/07/2010 for the course ACC 5100 taught by Professor Andrews during the Winter '09 term at Wayne State University.

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Key - HW18 - + 720,000 (Installment sale in 2008)- 300,000...

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