Short Answer Journal Entries & Income / Balance Statements

1. Fairplay had the following information related to the sale of its products during 2009, which was its first year of business:
Revenue$ 1,000,000
Returns of goods sold $ 100,000
Cash collected $ 800,000
Cost of goods sold $ 700,000
Under the accrual basis of accounting, how much net revenue would be reported on Fairplay's 2009 income statement? _________________

2. At the beginning of 2009, Florida Road Construction entered into a contract to build a road for the government. Construction will take four years. The follow-ing information as of 31 December 2009 is available for the contract: Total revenue according to contract $ 10,000,000
Total expected cost $ 8,000,000
Cost incurred during 2009 $ 1,200,000
Assume that the company estimates percentage complete based on costs incurred as a percentage of total estimated costs. Under the completed contract method, how much revenue will be reported in 2009? _________

3. During 2009, Argo Company sold 10 acres of prime commercial zoned land to a builder for$ 5,000,000 The builder gave Argo a$ 1,000,000 down payment and will pay the remaining balance of$ 4,000,000 to Argo in 2010. Argo purchased the land in 2002 for$ 2,000,000. Using the installment method, how much profit will Argo report for 2009? __________

4. Apex Consignment sells items over the internet for individuals on a consign-ment basis. Apex receives the items from the owner, lists them for sale on the internet, and receives a 25 percent commission for any items sold. Apex collects the full amount from the buyer and pays the net amount after commission to the owner. Unsold items are returned to the owner after 90 days. During 2009, Apex had the following information:
• Total sales price of items sold during 2009 on consignment was €2,000,000.
• Total commissions retained by Apex during 2009 for these items was €500,000.
How much revenue should Apex report on its 2009 income statement? __________

5. During 2009, Accent Toys, which began business in October of that year, purchased 10,000 units of a toy at a cost of £10 per unit in October. The toy sold well in October. In anticipation of heavy December sales, Accent pur-chased 5,000 additional units in Iovember at a cost of £11 per wlit. During 2009, Accent sold 12,000 units at a price of £15 per unit. Under the first in, first out (FIFO) method, what is Accent's cost of goods sold for 2009? __________

5A. Using the same information as in the previous question, what would Accent's cost of goods sold be under the weighted average cost method? __________

7. At the beginning of 2009, Glass Manufacturing purchased a new machine for its assembly line at a cost of $ 600,000. The machine has an estimated useful life of 10 years and estimated residual value of $ 50,000. Under the straight-line method, how much depreciation would Glass take in 2010 for financial reporting purposes? __________

7A. Using the same information in the Glass Manufacturing problem above, how much depreciation would Glass take in 2009 for financial reporting purposes under the double-declining balance method? ________ ?

8. Which inventory method is least likely to be used under IFRS? __________

9. AAA has a contract to build a building for $ 100,000 with an estimated time to completion of three years. A reliable cost estimate for the project is$ 60,000. In the first year of the project, AAA incurred costs totaling $ 24,000. How much profit should AAA report at the end of the first year under the percentage-of-completion method and the completed-contract method? Percentage-of-completion _________________
Completed Contract: _________________

10. Continental Corporation reported sales revenue of$ 150,000 for the current year. If accounts receivable decreased $ 10,000 during the year and accounts payable increased $ 4,000 during the year, cash collections were: __________

11. A company reported the following information for its most recent year of operation: inventory purchases, $100,000; beginning inventory, $20,000; and cost of goods sold, $110,000. How much was the company's ending inventory? __________

12. The MNH Company had cost of goods sold equal to $600,000. If the beginning balance in inventory was $34,000 and the ending balance in inventory was $64,000, wha.t were the purchases of inventory during the year? __________