ACCT 557 Week 1 Quiz

Date Taken:

1/5/2016

Question Type:

# Of Questions:

Multiple Choice

5

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?

Question 2.

Question :

(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 ?

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 $4500000.  Additional information was provided:
                       
As of Dec 31….                                              2012                2013
Percentage of completion                               35%                 60%
Estimated total expected costs                    $3,750,000      $3,900,000
Gross profit recognized (Cumulative)            $225,000         $300,000
                       
Contracted costs incurred during 2013 were…

Question 4.

Question :

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

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?