Practice_Solutions_for_Final_Revision_Questions

Practice_Solutions_for_Final_Revision_Questions - Practice...

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Unformatted text preview: Practice Solutions for Final Revision Questions Revenue Recognition E18-8 and E18-9 EXERCISE 18-7 (2530 minutes) (a) 1. Gross profit recognized in 2010: Contract price................................................. $1,200,000 Costs: Costs to date........................................... $280,000 Estimated additional costs.................... 520,000 800,000 Total estimated profit..................................... 400,000 Percentage completion to date ($280,000/$800,000).................................... 35% Gross profit recognized in 2010................... $ 140,000 Gross profit recognized in 2011: Contract price................................................. $1,200,000 Costs: Costs to date........................................... $600,000 Estimated additional costs.................... 200,000 800,000 Total estimated profit..................................... 400,000 Percentage completion to date ($600,000/$800,000).................................... 75% Total gross profit recognized........................ 300,000 Less: Gross profit recognized in 2010........ 14 0,000 Gross profit recognized in 2011................... $ 160,000 EXERCISE 18-7 (Continued) 2. Construction in Process ($600,000 $280,000).... 320,000 Materials, Cash, Payables, etc....................... 320,000 Accounts Receivable ($500,000 $150,000)........ 350,000 Billings on Construction in Process............. 350,000 Cash ($320,000 $120,000).................................... 200,000 Accounts Receivable...................................... 200,000 Construction in Process......................................... 160,000 Construction Expenses.......................................... 320,000 Revenues from Long-Term Contracts........... 480,000* *$1,200,000 X [($600,000 $280,000) $800,000] (b) Income Statement (2011) Gross profit on long-term construction contract.......... $160,000 Balance Sheet (12/31/11) Current assets: Receivablesconstruction in process................... $180,000* Inventoriesconstruction in process totaling $900,000** less billings of $500,000.................... $400,000 * *$180,000 = $500,000 $320,000 **Total cost to date $600,000 2010 Gross profit 140,000 2011 Gross profit 160,000 $900,000 EXERCISE 18-8 (1520 minutes) (a) 2010 $640,000 X $2,200,000 = $880,000 $1,600,000 2011$2,200,000 (contract price) minus $880,000 (revenue recognized in 2010) = $1,320,000 (revenue recognized in 2011). (b) All $2,200,000 of the contract price is recognized as revenue in 2011....
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This note was uploaded on 11/12/2011 for the course ACCT 2015 taught by Professor Dr,moore during the Spring '10 term at University of the West Indies at Mona.

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Practice_Solutions_for_Final_Revision_Questions - Practice...

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