chap005 1

chap005 1 - 00 2010 Cost recovery %: $245,000 = 70% (gross...

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00 2010 Cost recovery %: $245,000 = 70% (gross profit % = 30%) $350,000 2009 gross profit: Cash collection from 2009 sales of $150,000 x 35% = $52,500 2010 gross profit: Cash collection from 2009 sales of $100,000 x 35% = $ 35,000 + Cash collection from 2010 sales of $120,000 x 30% = 36,000 Total 2010 gross profit $71,000Requirement 2 2009 deferred gross profit balance: 2009 initial gross profit ($360,000 - 234,000) $126,000 Less: Gross profit recognized in 2009 (52,500) Balance in deferred gross profit account $73,500 2010 deferred gross profit balance: 2009 initial gross profit ($360,000 - 234,000) $ 126,000 Less: Gross profit recognized in 2009 (52,500) Gross profit recognized in 2010 (35,000) 2010 initial gross profit ($350,000 - 245,000) 105,000 Less: Gross profit recognized in 2010 (36,000) Balance in deferred gross profit account $107,500Exercise 5-3 2009 To record installment salesInstallment receivables 360,000 Inventory 234,000 Deferred gross profit 126,0002009 To record cash collections from installment salesCash 150,000 Installment receivables 150,0002009 To recognize gross profit from installment salesDeferred gross profit 52,500 Realized gross profit 52,5002010 To record installment salesInstallment receivables 350,000 Inventory 245,000 Deferred gross profit 105,0002010 To record cash collections from installment salesCash 220,000 Installment receivables 220,0002010 To recognize gross profit from installment salesDeferred gross profit 71,000 Realized gross profit 71,000Exercise 5-4Requirement 1 Year Income recognized 2009 $180,000 ($300,000 - 120,000) 2010 - 0 - 2011 - 0 - 2012 - 0 - Total $180,000Requirement 2 Cost recovery %: $120,000 ------------- = 40% (gross profit % = 60%) $300,000 #####Year#Cash Collected#Cost Recovery(40%)#Gross Profit(60%)##2009#$ 75,000#$ 30,000#$ 45,000##2010# 75,000# 30,000# 45,000##2011# 75,000# 30,000# 45,000##2012# 75,000# 30,000# 45,000## Totals#$300,000#$120,000#$180,000#######Requirement 3#####Year#Cash Collected#Cost Recovery#Gross Profit##2009#$ 75,000#$ 75,000# - 0 -##2010# 75,000# 45,000#$ 30,000##2011# 75,000# - 0 -# 75,000##2012# 75,000# - 0 -# 75,000## Totals#$300,000#$120,000#$180,000#######Exercise 5-5Requirement 1 July 1, 2009 To record installment saleInstallment receivables 300,000 Sales revenue 300,000Cost of goods sold 120,000 Inventory 120,000 To record cash collection from installment saleCash 75,000 Installment receivables 75,000July 1, 2010 To record cash collection from installment saleCash 75,000 Installment receivables 75,000Exercise 5-5 (continued)Requirement 2July 1, 2009 To record installment saleInstallment receivables 300,000 Inventory 120,000 Deferred gross profit 180,000 To record cash collection from installment sale Cash 75,000 Installment receivables 75,000 To recognize gross profit from installment saleDeferred gross profit 45,000 Realized gross profit 45,000July 1, 2010 To record cash collection from installment saleCash 75,000 Installment receivables 75,000 To recognize gross profit from installment sale
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This note was uploaded on 07/10/2011 for the course ACG 3101 taught by Professor Wodward during the Spring '08 term at FSU.

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chap005 1 - 00 2010 Cost recovery %: $245,000 = 70% (gross...

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