Prepare the necessary journal entries for 2011 and

  • St John's College
  • ECON 110
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  • grandriceracoon
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(2) Prepare the necessary journal entries for 2011 and 2012, applying the installment sales method. (Omit the "$" sign in your response.)
Installment receivables 300,000 Inventory 120,000 Deferred gross profit 180,000 To record cash collection from installment sale Cash 75,000 Installment receivables 75,000 To recognize gross profit from installment sale Deferred gross profit 45,000 Realized gross profit 45,000 July 1, 2012 To record cash collection from installment sale Cash 75,000 Installment receivables 75,000 To recognize gross profit from installment sale Deferred gross profit 45,000 Realized gross profit 45,000 (3) Prepare the necessary journal entries for 2011 and 2012, applying the cost recovery method. (Omit the "$" sign in your response.)
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 "$" sign in your response.)
(2) Compute the amount of gross profit or loss to be recognized in 2011 and 2012 using the completed contract method. (Leave no cells blank - be certain to enter "0" wherever required. Omit the "$" sign in your response.) 0
(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 "$" sign in your response.)
(4) Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2011 using the completed contract method. (Omit the "$" sign in your response.)
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

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