AC323 CHAPTER 18 HW SOLUTIONS

# AC323 CHAPTER 18 HW - \$132,000 EXERCISE 18-13(Continued(b Repossessed Merchandise 8,000 Deferred Gross Profit(\$12,000 X 32 3,840 Loss on

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CHAPTER 18 Revenue Recognition Homework Solutions (Textbook Version) Excluding Non-Algorithmic Assignments EXERCISE 18-13 Gross Profit Rate—2010: (\$750,000 – \$510,000) ÷ \$750,000 = 32% Gross Profit Rate—2011: (\$840,000 – \$588,000) ÷ \$840,000 = 30% (a) Balance, December 31, 2010 : Deferred Gross Profit Account—2010 Installment Sales Gross profit on installment sales—2010 (\$750,000 – \$510,000). ......................................................... \$240,000 Less: Gross profit realized in 2010 (\$310,000 X 32%) . ........ (99,200 ) Balance at 12/31/10. ..................................................... \$140,800 Balance, December 31, 2011 : Deferred Gross Profit Account—2010 Installment Sales Balance at 12/31/10. ................................................................ \$140,800 Less: Gross profit realized in 2011 on 2010 sales (\$300,000 X 32%). ......................................................... (96,000 ) Balance at 12/31/11. ..................................................... \$ 44,800 Deferred Gross Profit Account—2011 Installment Sales Gross profit on installment sales—2011 (\$840,000 – \$588,000). ......................................................... \$252,000 Less: Gross profit realized in 2011 on 2011 sales (\$400,000 X 30%). ......................................................... (120,000 ) Balance at 12/31/11.

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Unformatted text preview: ..................................................... \$132,000 EXERCISE 18-13 (Continued) (b) Repossessed Merchandise. ...................................... 8,000 Deferred Gross Profit (\$12,000 X 32%). .................... 3,840 Loss on Repossession. ............................................. 160* Installment Accounts Receivable. ..................... 12,000 (To record the default and the repossession of the merchandise) *[\$8,000 – (\$12,000 – \$3,840)] PROBLEM 18-2 (a) 2010 2011 2012 Contract price \$900,000 \$900,000 \$900,000 Less estimated cost: Costs to date 270,000 450,000 610,000 Estimated cost to complete 330,000 150,000 — Estimated total cost 600,000 600,000 610,000 Estimated total gross profit \$300,000 \$300,000 \$290,000 Gross profit recognized in— 2010: \$270,000 X \$300,000 = \$135,000 \$600,000 2011: \$450,000 X \$300,000 = \$225,000 \$600,000 Less 2010 recognized gross profit 135,000 Gross profit in 2011 \$ 90,000 2012: Less 2010–2011 recognized gross profit 225,000 Gross profit in 2012 \$ 65,000 (b) In 2010 and 2011, no gross profit would be recognized. Total billings. ..................................... \$900,000 Total cost. .......................................... 610,000 Gross profit recognized in 2012 . ..... \$290,000...
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## This note was uploaded on 06/05/2011 for the course ACCT 323 taught by Professor Eubanks during the Spring '11 term at Athens University of Econ and Bus.

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AC323 CHAPTER 18 HW - \$132,000 EXERCISE 18-13(Continued(b Repossessed Merchandise 8,000 Deferred Gross Profit(\$12,000 X 32 3,840 Loss on

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