ACCT 557 ACCT557 Week 1 Quiz Answers (Devry)

ACCT 557 ACCT557 Week 1 Quiz Answers (Devry)


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ACCT 557 Week 1 quiz

    1. (TCO A) Platypus Building Inc. won a bid for a new office building contract. Below is info from the project accountant:
    2. (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 ?
    3. (TCO A) Blue Suede Construction Corp used the percentage-of-completion method of revenue recognition. They were contracted to build the new amphitheater for $800000.  Additional information was provided:
      As of Dec 31….                                              2012                2013
      Percentage of completion                               15%                 40%
      Estimated total expected costs                    $550,000         $580,000 
      Gross profit recognized (Cumulative)            $50,000           $99,000 
      Contracted costs incurred during 2013 were…
    4. (TCO A) In industries with high rates of return (such as a magazine distribution company) an alternative method of revenue recognition would be…
  • (TCO A) Windsor Construction Company uses the completed contract method of accounting. In 2014, Windsor began work on a two year contract it had received which provided for a contract price of $3,000,000. Other details follow for 2014: 
    • Costs incurred during the year $1,400,000
    • Estimated costs to complete as of December 31 2014, $600,000
    • Billings during the year $1,000,000
    • Collections during the year $900,000
    What should be the gross profit recognized in 2014?

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