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Aspen enters into a contract for $ 840,000. The following data is available:
Each of the above contracts is with a different customer, and any work
remaining at December 31, 2008 is expected to be completed in 2009.
Instructions
Prepare a partial income statement and a partial balance sheet to indicate
how the above contract information would be reported. Ponce uses the
completed-contract method.
Balance Sheet:
Accounts Receivable $ 43,000
Const. In Progress $ 130,000
Less: Billings $ 123,000
Income Statement:
Income recognized in 2007 $ 36,400
S&W Metals Inc. had the following information regarding its installment
sales for Year 1 and Year 2. Prepare journal entries for both years.
Year 1 Year 2
Sales 300,000 500,000
COGS 180,000 350,000
Collection on Year 1 Sales 140,000 160,000
Collection on Year 2 Sales 0 400,000
A customer’s AR balance is $ 30,000 and the Gross Profit percentage is
20% on sales. The customer defaults, and the merchandise, having a fair
market value of $ 27,000 is repossessed. What is the gain or loss on this
transaction?
Year 1 Year 2
Sales 50,000 80,000
COGS 35,000 60,000
Collection of Year 1 sales 25,000 15,000
Collection of Year 2 sales 0 40,000