1.

Question :

(TCO A) Platypus Building Inc. won a bid for a new office building contract. Below is info from the project accountant: Total Construction Fixed Price Construction Start Date Construction Complete Date As of Dec 31 Actual cost incurred Estimated remaining costs Billed to customer Received from customer $7,000,000 March 3, 2012 December 4, 2013 2012 $2,700,000 $2,700,000 $2,400,000 $2,000,000 2013 $3,050,000 $$4,600,000 $4,800,000

Assuming Platypus Building Inc. uses the completed contract method, what amount of gross profit would be recognized in 2013?
Student Answer:

$450,000 $625,000 $1,050,000 $1,250,000

Instructor Explanation:

Chapter 18. 7000000 (2700000 + 3050000)

5 of 5

Points Received: Comments:

2.

Question :

(TCO A) Kerry Corp purchased a used bottling machine from Bob's Bottling Inc. on Jan 1, 2012 for $2100000. Bob accounted for the sale correctly under the installment sales method. It had a book value of $1575000. Kerry paid with $300000 cash and a note for $1800000 with an annual interest of 10%. Kerry agreed to make equal annual payments of $600000. Kerry Corp made their first payment on Jan 1, 2013 of $780000 which included interest of $180000 to date of payment. As of Dec 31, 2013 Bob has deferred gross profit of ?

Student Answer:

$255,000 $330,000 $375,000 $300,000

Instructor Explanation:

Chapter 18.

Points Received: Comments:

0 of 5

3.

Question :

(TCO A) Blue Suede Construction Corp used the percentage-ofcompletion method of revenue recognition. They were contracted to build the new amphitheater for $4500000. Additional information was provided: As of Dec 31. Percentage of completion Estimated total expected costs Gross profit recognized (Cumulative) 2012 35% $3,750,000 $225,000 2013 60% $3,900,000 $300,000

Contracted costs incurred during 2013 were

Student Answer:

$975,000 $2,340,000 $825,000 $1,027,500

Instructor Explanation:

Chapter 18
Points Received: Comments: 0 of 5

4.

Question : Student Answer:

(TCO A) Revenue is NOT recognized at the time of sale when the buyer obtains legal title the sales is the critical event goods have been exchanged for payment on credit card All of these are reasons to recognize revenue at the time of sale.

Instructor Explanation:

Chapter 18
5 of 5

Points Received: Comments: