ACCT 557 WEEK 1 QUIZ

ACCT 557 WEEK 1 Grade Details All Questions
Question 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                 $8,000,000     
Construction Start Date                            March 3, 2012 
Construction Complete Date                    December 4, 2013       
                              
As of Dec 31…                             2012                            2013
Actual cost incurred                      $2,500,000                 $3,150,000 
Estimated remaining costs            $3,750,000                   $-   
Billed to customer                        $2,400,000                   $5,300,000 
Received from customer               $2,250,000                 $5,400,000 
                              
Assuming Platypus Building Inc. uses the completed contract method, what amount of gross profit would be recognized in 2013?

 	Student Answer:		  $2,000,000

 		 	  $2,350,000

 			  $1,650,000

 			  $940,000

 	Instructor Explanation:	Chapter 18. 8000000 - (2500000 + 3150000)


 	Points Received:	5 of 5
 	Comments:	



Question 2.	Question :	(TCO A) Kerry Corp purchased a used bottling machine from Bob's Bottling Inc. on Jan 1, 2012 for $900000.  Bob accounted for the sale correctly under the installment sales method.  It had a book value of $675000.  Kerry paid with $300000 cash and a note for $600000 with an annual interest of 10%.  Kerry agreed to make equal annual payments of $200000.  Kerry Corp made their first payment on Jan 1, 2013 of $260000 which included interest of $60000 to date of payment.
As of Dec 31, 2013 Bob has deferred gross profit of ?

 	Student Answer:	 	  $85,000

 		 	  $100,000

 			  $175,000

 			  $160,000

 	Instructor Explanation:	Chapter 18.  


 	Points Received:	5 of 5
 	Comments:	



Question 3.	Question :	(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…

 	Student Answer:		  $145,000

 		 	  $149,500

 		 	  $151,000

 			  $232,000

 	Instructor Explanation:	Chapter 18.  


 	Points Received:	5 of 5
 	Comments:	



Question 4.	Question :	(TCO A) Revenue should NOT be recognized at the time of sale if…

 	Student Answer:		  goods were purchased with a credit card payment

 		 	  the buyer has sixty days to return the goods and the amount of future returns cannot be estimated
 			  the selling price is substantially less than the normal selling price

 			  none of the above

 	Instructor Explanation:	Chapter 18


 	Points Received:	5 of 5
 	Comments:	



Question 5.	Question :	(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?

 	Student Answer:		  $700,000

 		 	  $0

 			  $1,400,000

 		 	  $2,100,000

 	Instructor Explanation:	Chapter 18


 	Points Received:	5 of 5
 	Comments: