Compute the amount of gross profit recognized

Assignment Help Financial Accounting
Reference no: EM131231026

Module Problem-Solution Assignment:

Problem 1

Red Sox Company has the following sales of land and cash collections:

In 2010, there was the sale of Bux Land for $3,000,000 that cost them $1,500,000. The purchase agreement required that payments be made of $1,200,000 when there are tenants on the land and the following payment of $1,200,000 was made in 2010.

In 2011, there was the sale of Spokane County land for $2,700,000 which cost Red Sox $1,800,000. The payments were required were $900,000 when development started on the land and then the final payments of $900,000 each in 2012 and 2013. Red Sox had cash collections of the $900,000 and a payment of $700,000 for Bux Land in 2011.

Additional Facts:

You will assume that Red Sox Company can estimate with ease the uncollectible accounts and then accrues the bad debts of 7% of sales and will recognize the revenue upon the transfer of title.

Requirements:

Prepare the journal entries to record the sales, cash collections and recognition of gross profit only if appropriate in the years 2010 and 2011.

Problem 2

Alpha Great Construction was the best selection to build the Stoddard Temple for the amount of $2,500,000. The project broke ground in 2010 and was then completed in 2011. Below the cost and other data are shown below:

Year

2010

2011

Costs incurred during the year

$555,000

1,200,000

Estimated sosts to complete

1,500,000

0

Billings during the year

450,000

1,500,000

Cash Collection during the year

350,000

1,400,000

Alpha Great Construction is using the percentage of completion method to recognize revenue:

Requirements:

Compute the amount of gross profit recognized in 2010 and 2011.

Reference no: EM131231026

Questions Cloud

Is there a clear thesis or specific statement of purpose : Is there a clear thesis statement or specific statement of purpose? Does the speaker demonstrate a good understanding of the material? Does the speaker incorporate appropriate recent and credible supporting materials or evidence?
Firm to study and understand the external environment : Why is it important for a firm to study and understand the EXTERNAL environment? How does the General Environment differ from the Industry Environment? Select any industry of your choice: Discuss at least TWO segments of the General Environment that ..
What similarities do you see between the companies : Give an example of at least two different types of companies and identify the basic activities and transaction cycles in each. What differences and similarities do you see between the companies?
Explain the key concepts of hertzberg theory of motivation : Explain the key concepts of Hertzberg theory of motivation. Explain how would use the finding of the Hertzberg theory of motivation to motivate your workers in a fast food industry
Compute the amount of gross profit recognized : Compute the amount of gross profit recognized in 2010 and 2011. Prepare the journal entries to record the sales, cash collections and recognition of gross profit only if appropriate in the years 2010 and 2011.
Preparing to meet increased demand over the next three years : Your company is preparing to meet increased demand over the next three years. To do so, its CFO has determined that you should build a new manufacturing facility, either in Bay Town or in Pasadena. The lender will offer different rates for these two ..
The cost of the research project before approving : The marketing manager needs to know the cost of the research project before approving it. During which stage of the marketing research process would such a consideration most likely take place?
Promotional pricing and differentiated pricing : What type of strategy consists of geographical pricing, price discounts and allowances, promotional pricing, and differentiated pricing?
Discuss possible strategies that the company could follow : Discuss possible strategies that the company could follow to defend its core business. In the light of your discussion in tasks 1-4, analyse and evaluate the resource implications of your recommendations that the company has to address

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd