ce_18-21 - Copy - COMPREHENSIVE EXAMINATION E PART 5...

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COMPREHENSIVE EXAMINATION E PART 5 (Chapters 18-21) Approximate Problem Topic Time E-I Long-Term Contracts. 15 min. E-II Installment Sales Method. 20 min. E-III Deferred Income Taxes. 25 min. E-IV Pensions. 15 min. E-V Leases. 25 min. 100 min.
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Test Bank for Intermediate Accounting, Thirteenth Edition Problem E-I — Long-Term Contracts. Edwards Company contracted on 4/1/10 to construct a building for $2,500,000. The project was completed in 2012. Additional data follow: 2010 2011 2012 Costs incurred to date $ 560,000 $1,350,000 $1,900,000 Estimated cost to complete 1,040,000 450,000 Billings to date 500,000 2,000,000 2,500,000 Collections to date 400,000 1,300,000 2,400,000 Instructions (a) Calculate the income recognized by Edwards under the percentage-of-completion method of accounting in each of the years 2010, 2011, and 2012. (b) Prepare all necessary entries for the year 2011. (c) Present the balance sheet disclosures at December 31, 2011. Proper headings or subheadings must be indicated. Problem E-II — Installment Sales Method. Garber, Inc. accounts for all sales of its merchandise on the installment basis. Following is the unadjusted trial balance at 12/31/12: Cash $ 90,200 Installment Accounts Receivable—2010 170,000 Installment Accounts Receivable—2011 400,000 Installment Accounts Receivable—2012 750,000 Inventory, 1/1/12 78,000 Repossessed Merchandise 22,000 Accounts Payable $ 136,000 Deferred Gross Profit—2010 84,000 Deferred Gross Profit—2011 195,000 Capital Stock 600,000 Retained Earnings 406,200 Installment Sales 1,000,000 Purchases 758,000 Loss on Repossession 3,000 Operating Expenses 150,000 $2,421,200 $2,421,200 Additional Data: 2010 Gross Profit Rate = 30%; Inventory 12/31/12 = $158,000; Repossessed merchandise 12/31/12 = $15,000; Merchandise sold in 2011 was repossessed in 2012 and the following entry was prepared (assume correctly): Deferred Gross Profit—2011. ................................ 15,000 Repossessed Merchandise. .................................. 22,000 Loss on Repossession . ........................................ 3,000 Installment Accounts Receivable—2011. ... 40,000 E - 2
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Comprehensive Examination E Problem E-II (cont.) Instructions (a) Determine collections during 2012 on Installment A/R for each of the years 2010, 2011, and 2012. (b) Without prejudice to your answer in Part (a), assume that total collections on Installment Accounts Receivable during 2012 were $1,060,000; $220,000 from 2010, $300,000 from 2011, and $540,000 from 2012. Prepare all necessary adjusting and closing entries at 12/31/12. Problem E-III — Deferred Income Taxes. In 2011, the initial year of its existence, Dexter Company's accountant, in preparing both the income statement and the tax return, developed the following list of items causing differences between accounting and taxable income: 1. The company sells its merchandise on an installment contract basis. In 2011, Dexter elected,
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This note was uploaded on 04/06/2011 for the course ECON 3332 taught by Professor Craig during the Spring '11 term at Rensselaer Polytechnic Institute.

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ce_18-21 - Copy - COMPREHENSIVE EXAMINATION E PART 5...

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