Acct557 Excercises 18-12 to Ex 18-15

BE18-7

2012

Contract Price 7,000,000

Less Estimated Cost:

Cost to date 1,700,000

Estimated Cost to Complete 3,300,000

Estimated Total Cost 5,000,000=(1,700+3,300)

Estimated Total Gr. Profit 2,000,000=(7,000-5,00)

Percent Complete 1,700,000/5,000,000=34%

Percentage of Completion Revenue, cost, and Gross Profit by Year

2012 To date

Revenue (7,000,000 x 34%) 2,380,000

Costs 1,700,000

Gross Profit 680,000

To record Cost of Construction: for 2012

Dr. Construction in Process 1,700,000

Cr. Material, Payables, Cash and etc1,700,000

To record the process of billing: for 2012

Dr. Accounts Receivables 1,200,000

Cr. Billing on Construction in Progress 1,200,000

To Record Collections:

Dr. Cash 960,000

Cr. A/R 960,000

BE18-13 Lazaro Inc. sells goods on the installment basis and uses the installment-sales method. Due to a customer default, Lazaro repossessed merchandise that was originally sold for $800, resulting in a gross profit rate of 40%. At the time of repossession, the uncollected balance is $520, and the fair value of the repossessed merchandise is $275. Prepare Lazaro’s entry to record the repossession.

Calculation of Loss on Repossession (520-208)-275=37; Calculation of deferred gross profit (520 x 40%)= 208

Dr. Repossessed Merchandise 275

Dr. Loss on Repossession 37

Dr. Deferred Gross Profit 208

Cr. Installment A/R 520

BE18-15 Schuss Corporation sold equipment to Potsdam Company for $20,000. The equipment is on Schuss’s books at a net amount of $13,000. Schuss collected $10,000 in 2012, $5,000 in 2013, and $5,000 in 2014. If Schuss uses the...