Purchase Solution

Full accrual method and the cost recovery method

Not what you're looking for?

Ask Custom Question

Historically, 55% of sales are collected in the year of the sale, 30% in the following year, and 10% in the 3rd year.
Assuming collections are as projected, give the journal entries for the years 2004-2007, assuming the cost recovery method.
(Ignore provision for bad debts).
Prepare a table comparing the gross profit recognized for 2004-2007 using the full accrual method and the cost recovery method.

Sales Gross Profit Percentage
2004 47,000 45%
2005 45,000 42%
2006 58,000 47%
2007 61,000 49%
Prepare a table comparing the gross profit recognized using the full accrual method and the cost recovery method.

(See attached file for full problem description)

Attachments
Purchase this Solution
Solution Summary

This provides the steps to compare the gross profit recognized using the full accrual method and the cost recovery method

Solution Preview

Historically, 55% of sales are collected in the year of the sale, 30% in the following year, and 10% in the 3rd year.
Assuming collections are as projected, give the journal entries for the years 2004-2007, assuming the cost recovery method.
(Ignore provision for bad debts).
Prepare a table comparing the gross profit recognized for 2004-2007 using the full accrual method and the ...

Purchase this Solution
Free BrainMass Quizzes
Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Organizational Behavior (OB)

The organizational behavior (OB) quiz will help you better understand organizational behavior through the lens of managers including workforce diversity.

Motivation

This tests some key elements of major motivation theories.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

View More Free Quizzes
Related BrainMass Solutions

  • Preparing a Cash Flow Summary

    470751 Preparing a Cash Flow Summary Prepare the cash flow summary for a project given the following information: Service life 8 years Recovery period 5 years Depreciation method Accelerated Purchase price $9700 Installation and shipping cost

  • Quick and Current Liquidity Ratios, DuPont Ratio, Profit Margin, Asset Utilization and Financial Leverage for GE.

    Difference between Cash Basis and Accrual Basis Accounting Method The cash and accrual basis are the two primary accounting methods that are used to calculate the taxable income.

  • Maturity Matching

    For example, most corporations operate under a full accrual system where revenues are recognized when they are earned and expenses are recognized when they are incurred.

  • Accounting for endowment funds on a full accrual basis.

    Even though the account is generating additional revenue in the form of non-operating revenue, the full method of accounting is used for all transactions and activity that take place in the nonexpendable endowment fund.

  • Benefits of being able to record expenses

    The headaches of the old fashioned method are cut in half on time, and he or she feels that their time was used in a productive method.

  • accrual accounting

    The accrual method is useful for the large businesses, whereas the cash method is used for the professionals and small businesses (Siciliano, 2003).

  • GASB Criteria in Governments

    Employers (single employer or agent multiple employer) should use the accrual method of accounting to measure and disclose an amount of annual pension cost (www.gasb.org).

  • Warranties, Accrual, and Cash Basis

    As a result of product testing, the company estimates that the warranty cost is $370 per machine ($170 parts and $200 labor). Instructions: A) Under application of the expense warranty accrual method for: 1. Sale of machinery in 2008 2.

  • Smith Corp. East Corp., Terry Transport, Merrick - Tax entry

    Use of the straight-line depreciation method for financial statement purposes and the modified Accelerated Cost Recovery System (MACRS) for income tax purposes. b.

View More Related Solutions