Acct557Week1Ch18

Calculate the revenue to be recognized in fiscal year 2012 for each division of Patty Corporation in accordance with generally accepted accounting principles. Show all calculations for full credit.

Pat's Electronics Division

Pat's Electronics Division sells computers through agents in various cities. Agents send orders and down payments to our company. The division then ships the goods F.O.B. shipping point directly to the customers. Revenue is recognized at the point of sale.

Additional Financial Data:

Orders for fiscal year 2012 $3,000,000

Down Payments collected in 2012 $300,000

Billed and shipped in 2012 $2,400,000 Revenue for fiscal year 2012 $2,400,000

Freight billed in 2012 $70,000

Commissions paid to Agents (after ship to customer) 10%

Warranty Returns as % of Sales 1%

Pickle Construction Division

The pickle construction division was working on one project for the 2012 fiscal year. They use the percentage of completion revenue recognition method.

Contract for new administration building

Total Contract Amount $60,000,000 Contract Price $60,000,000

Contract Grant Date 14-Aug-12 Less: Cost to Date $14,140,000

Construction Began 1-Sep-12 Less: Estimated cost to complete $36,360,000

Total cost $50,500,000

Estimated Cost to Complete at beginning of contract $52,000,000 Gross Profit $9,500,000

Estimated Time to Complete Project 2 Years Percentage completed 0.28

($14,140,000/(14,140,000+$36,360,000)

As of Dec. 31, 2012 Revenue to be recognized in 2012 $16,800,000

Construction Cost incurred to date $14,140,000 ($60,000,000*0.39)

Billings to date $19,500,000

Expected costs to complete $36,360,000

Peace Book Distribution Division

Our book distribution division sells to...