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    Fundamental Accounting Principles

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    Problem 3:
    The Bryan Construction Company received a contract to build a new dormitory complex. The selling price of $30,000,000 will be paid when the complex is completed. The costs to construct the complex are as follows: {see attachment}.
    a. Assuming the contract is with a large state-supported school which is very strong financially, how much revenue should The Bryan Construction Company recognize in 19X9?
    b. Assume, instead, that the contract is with a school whose financial status is uncertain, and hence the probability of collection is uncertain, how much revenue should Bryan recognize in 19X9?

    Problem 4:
    The Denton Company had the following balances at January 1, 20X0:
    Accounts Receivable $250,000 Debit
    Allowance for Uncollectible Accounts $16,000 Credit

    The following activity occurred during 20X0:
    1. Cash sales were $800,000
    2. In addition, cash sales were made to special customers who were given a 4% trade discount. The normal selling price (before the discount) was $200,000.
    3. Credit sales were $2,800,000
    4. Collections on credit sales: cash collections were $2,608,000; however, credit customers also took advantage of $42,000 worth of cash discounts offered.
    5. Sales returns and allowances on credit sales were $26,000. A full credit was given by The Denton Company.
    6. Write-offs of bad debts were $17,100.
    7. Bad debt recoveries were $300.
    8. The December 31, 20X0 estimation of bad debts is 7% of the ending
    accounts receivable balance.

    a. Prepare the appropriate journal entry for The Denton Company for each of the transactions noted above.

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    Hi there,

    Please see the attached Word document.

    Problem # 3:

    The Bryan Construction Company received a contract to build a new dormitory complex. The selling price of $30,000,000 will be paid when the complex is completed. The costs to construct the complex are as follows:
    Year Cost
    19X9 $4,000,000
    20X0 9,000,000
    20X1 8,000,000
    $21,000,000

    a. Assuming the contract is with a large state-supported school which is very strong financially, how much revenue should The Bryan Construction Company recognize in 19X9?

    b. Assume, instead, that the contract is with a school whose financial status is uncertain, and hence the probability of collection is uncertain, how much revenue should Bryan recognize in 19X9?

    Answer:

    A) An option is to use the percentage of completion method. With this ...

    Solution Summary

    This question involves the fundamentals of accounting

    $2.19

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