Pankratov lakes is a new recreational real estate
Course:- Accounting Basics
Reference No.:- EM13601432

Assignment Help
Expertsmind Rated 4.9 / 5 based on 47215 reviews.
Review Site
Assignment Help >> Accounting Basics

Pankratov Lakes is a new recreational real estate development which consists of 500 lake-front and lake-view lots. As a special incentive to the first 100 buyers of lake-view lots, the developer is offering 3 years of free financing on 10-year, 12% notes, no down payment, and one week at a nearby established resort  "a $1200 value." The normal price per lot is $12,000. The cost per lake-view lot to the developer is an estimated average of $2,000. The development costs continue to be incurred; the actual average cost per lot is not known at this time. The resort promotion cost is $700 per lot. The notes are held by Davis Corp., a wholly owned subsidiary.

a. Discuss the revenue recognition and gross profit measurement issues raised by this situation.

b. How would the developer's past financial and business experience influence your decision concerning the recording of these transactions?

c. Assume 50 persons have accepted the offer, signed 10-year notes, and have stayed at the local resort. Prepare the journal entries that you believe are proper.

d. What should be disclosed in the notes to the financial statements?

Put your comment

Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
Determine the company's predetermined overhead rate for year 2011. Assuming that the company's $57,000 ending Goods in Process Inventory account for year 2011 had $18,000 of
Who are the stakeholders in situation and what are the ethical issues involved - decrease depreciation expense and require less extensive disclosure, since the changes are acc
Wonder Dog Leash Company is seeking to raise cash and is in negotiation with Big Bucks finance company (BB) to pledge theirreceivables.BB is willing to loan funds against 75 p
Prepare a partial income statement beginning with income from continuing operations before income tax, and including appropriate earnings per share information. Assume 10,000
Raspberry Company's actuary has computed its prior service cost to be $8,000,000. The company amortizes the prior service cost by the straight line method over the remaining 2
A firm is evaluating an accounts receivable change that would increase bad debts from 2% to 4% of sales. Sales are currently 50,000 units, the selling price is $20 per unit,
Set up an amortization schedule for a $25,000 loan to be repaid in equal installments at the end of each of the next 3 years. The interest rate is 10 percent, compounded ann
Prepare the entries for estimated bad debts assuming that doubtful accounts are estimated to be (1) 6% of gross accounts receivable and (2) 1% of net sales.