E18-1B (5-10 minutes)
(a) Notes Receivable …………………………………… 445,000
E18-2B (5-10 minutes)
(a) Accounts Receivable …………………………..…. 530,000
E18-2B (5-10 minutes)
(a) Gee would recognize $950,000 of revenue at delivery.
E18-4B (10–15 minutes)
(a) This transaction is a bill and hold situation. Delivery of the counters is
delayed at the buyer’s request, but the buyer takes title and accepts
E18-5B (5-10 minutes)
(a) Accounts Receivable ……………………………… 2,000,000
Sales Revenue ………………………………… 2,000,000
E18-6B (15–20 minutes)
(a) Chester Books could recognize revenue at the point of sale based upon
the time of shipment because the books are sold f.o.b. shipping point.
Because of the return policy, one might argue in favor of the cash
collection basis. Because the returns can be estimated, one could argue
E18-7B (15–20 minutes)
(a) 1. 10/5 Accounts Receivable—Dunn & Brooks ……. 23,000
Sales ………………………………………………. 23,000
2. 10/5 Accounts Receivable—Dunn & Brooks ….. 22,770
Sales [$23,000 – (1% X 23,000)] ………. 22,770
10/9 Sales Returns and Allowances ……………… 2,376
Accounts Receivable—Dunn & Brooks
E18-8B (10–15 minutes)
Cash (2015 memberships)
[400 X $16,000 X (1.00 – 0.10)] …………………… 5,760,000
E18-9B (15–20 minutes)
(a) Inventoriable costs:
500 units shipped at cost of $100 each …………………………. $50,000
Freight ……………………………………………………………………… 1,250
E18-10B (10-15 minutes)
(a) The conditions for a multiple-deliverable arrangement exist for Apple
Core since the delivered item has value to the customer on a standalone
E18-11B (5-10 minutes)
(a) Cash ……………………………………………………… 75,000
E18–12B (20–25 minutes)
(a) Gross profit recognized in:
2014
2015
2016
Contract price
$2,500,000
$2,500,000
$2,500,000
Costs:
Less: Gross
profit recognized
in previous years
0
150,000
315,000
current year
$ 150,000
$ 165,000
$ 85,000
Gross profit
recognized in
E18–12B (Continued)
(c) Gross profit recognized in:
E18–13B (10–15 minutes)
(a) Contract billings to date …………………………………………… $260,000
Less: Accounts receivable 12/31/14 …………………………. 150,500
E18–14B (10–12 minutes)
WELTON INC.
Computation of Gross Profit to Be
Recognized on Uncompleted Contract
E18–15B (25–30 minutes)
(a) 1. Gross profit recognized in 2014:
Contract price …………………………………… $8,500,000
Costs:
Costs to date ……………………………… $ 800,000
E18–15B (Continued)
2. Construction in Process
($4,050,000 – $800,000) ……………………. 3,250,000
Materials, Cash, Payables, etc. ……… 3,250,000
Accounts Receivable
($4,000,000 – $500,000) ……………………. 3,500,000
E18–16B (15–20 minutes)
2014) = $450,000 (revenue recognized in 2015)
(b) All $1,500,000 of the contract price is recognized as revenue in 2015.
(c) Using the percentage-of-completion method, Young Tree Construction
would make the following entries: