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Fundamental Accounting Principles

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.


Solution Summary

This question involves the fundamentals of accounting