Omit the sign in your response Date General Journal Debit Credit July 1 2011 To

Omit the sign in your response date general journal

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Prepare the necessary journal entries for 2011 and 2012, applying the installment sales method. (Omit the "$" sign in your response.) Date General Journal Debit Credit July 1, 2011 To record installment sale
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Installment receivables 300,000 Inventory 120,000 Deferred gross profit 180,000 To record cash collection from installment sale Cash 75,000 Installment receivables 75,000 To recognize gross profit from installment sale Deferred gross profit 45,000 Realized gross profit 45,000 July 1, 2012 To record cash collection from installment sale Cash 75,000 Installment receivables 75,000 To recognize gross profit from installment sale Deferred gross profit 45,000 Realized gross profit 45,000 (3) Prepare the necessary journal entries for 2011 and 2012, applying the cost recovery method. (Omit the "$" sign in your response.) Date General Journal Debit Credit July 1, 2011 To record installment sale Installment receivables 300,000 Inventory 120,000 Deferred gross profit 180,000 To record cash collection from installment sale Cash 75,000 Installment receivables July 1, 2012 To record cash collection from installment sale
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Cash 75,000 Installment receivables 75,000 To recognize gross profit from installment sale Deferred gross profit 30,000 Realized gross profit 30,000 Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,000,000. The project began in 2011 and was completed in 2012. Data relating to the contract are summarized below: 2011 2012 Costs incurred during the year $ 300,000 $ 1,575,00 0 Estimated costs to complete as of 12/31 1,200,00 0 0 Billings during the year 380,000 1,620,00 0 Cash collections during the year 250,000 1,750,00 0 Required: (1) Compute the amount of gross profit or loss to be recognized in 2011 and 2012 using the percentage-of- completion method. (Omit the "$" sign in your response.) Gross Profit (Loss) 2011 $ 100,000 2012 $ 25,000 (2) Compute the amount of gross profit or loss to be recognized in 2011 and 2012 using the completed contract method. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) Gross Profit (Loss) 2011 $ 0 2012 $ 125,000 (3) Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2011 using the percentage-of-completion method. (Enter assets in the order of their liquidity. Omit the "$" sign in your response.)
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Balance Sheet At December 31, 2011 Current Assets: Accounts receivable $ 130,000 Costs and profit in excess of billings $ 20,000 (4) Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2011 using the completed contract method. (Omit the "$" sign in your response.) Balance Sheet At December 31, 2011 Current Assets: Accounts receivable $ 130,000 Current liabilities: Billing in excess of costs $ 80,000 Explanation: (1) 2011 2012 Contract price $ 2,000,000 $ 2,000,000 Actual costs to date 300,000 1,875,000 Estimate d costs to complete 1,200,000 0 Total estimated costs 1,500,000 1,875,000 Gross profit (estimated in 2011) 500,000 125,000 2011: $300,000 = 20% × $500,000 = $100,000 $1,500,000
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2012: $125,000 – $100,000 = $25,000 (3) Costs and profit ($400,000*) in excess of billings ($380,000) = $20,000 * Costs ($300,000) + profit ($100,000) (4) Billings ($380,000) in excess of costs ($300,000) = $80,000 On June 15, 2011, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington D.C. for $218 million. The expected completion date is April 1 of 2013, just in time for the 2013 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as
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