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1. Dexter purchases equipment from Ray Company for a. $59,289
a price of $5,000,000 and chooses Ray to do the installation. Ray doesn't charge for the installation of
equipment. The price of the installation service is estimated to have a fair value of $60,000. Assuming the
transaction to be multiple-deliverable arrangement,
compute the amount to be allocated to installation.
a. $59,289
b. $60,720
c. $60,000
d. $61,457
2. Seasons Construction is constructing an office build- c.
ing under contract for Cannon Company. The contract $4,464,000/$1,240,000
calls for progress billings and payments of $1,240,000
each quarter. The total contract price is $14,880,000
and Seasons estimates total costs of $14,200,000.
Seasons estimates that the building will take 3 years
to complete, and commences construction on January 2, 2014.
~At December 31, 2014, Seasons estimates that it is
30% complete with the construction, based on costs
incurred. What is the total amount of Revenue from
Long-Term Contracts recognized for 2014 and what
is the balance in the Accounts Receivable account
assuming Cannon Cafe has not yet made its last quarterly payment?
Revenue/ Accounts Receivable
a. $4,960,000/ $4,960,000
b. $4,260,000/$1,240,000
c. $4,464,000/$1,240,000
d. $4,260,000/$4,960,000
3. Seasons Construction is constructing an office build- d. $6,540,000
ing under contract for Cannon Company. The contract
calls for progress billings and payments of $1,240,000
each quarter. The total contract price is $14,880,000
and Seasons estimates total costs of $14,200,000.
Seasons estimates that the building will take 3 years
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to complete, and commences construction on January 2, 2014.
~At December 31, 2015, Seasons Construction estimates that it is 75% complete with the building;
however, the estimate of total costs to be incurred
has risen to $14,400,000 due to unanticipated price
increases. What is the total amount of Construction
Expenses that Seasons will recognize for the year
ended December 31, 2015?
a. $10,800,000
b. $6,300,000
c. $6,390,000
d. $6,540,000
4. Seasons Construction is constructing an office build- b.
ing under contract for Cannon Company. The contract $1,240,000/Debit
calls for progress billings and payments of $1,240,000
each quarter. The total contract price is $14,880,000
and Seasons estimates total costs of $14,200,000.
Seasons estimates that the building will take 3 years
to complete, and commences construction on January 2, 2014.
~At December 31, 2015, Seasons Construction estimates that it is 75% complete with the building;
however, the estimate of total costs to be incurred
has risen to $14,400,000 due to unanticipated price
increases. What is reported in the balance sheet at
December 31, 2015 for Seasons as the difference between the Construction in Process and the Billings on
Construction in Process accounts, and is it a debit or
a credit?
Difference between the accounts|Debit/Credit
a. $3,380,000/Credit
b. $1,240,000/Debit
c. $880,000/Debit
d. $1,240,000/Credit
5. Seasons Construction is constructing an office build- c. $3,720,000 $
ing under contract for Cannon Company. The contract 4,200,000
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calls for progress billings and payments of $1,240,000
each quarter. The total contract price is $14,880,000
and Seasons estimates total costs of $14,200,000.
Seasons estimates that the building will take 3 years
to complete, and commences construction on January 2, 2014.
~Seasons Construction completes the remaining 25%
of the building construction on December 31, 2016, as
scheduled. At that time the total costs of construction
are $15,000,000. What is the total amount of Revenue
from Long-Term Contracts and Construction Expenses that Seasons will recognize for the year ended
December 31, 2016?
Revenue Expenses
a. $14,880,000 $15,000,000
b. $3,720,000 $ 3,750,000
c. $3,720,000 $ 4,200,000
d. $3,750,000 $ 3,750,000
6. Cooper Construction Company had a contract start- b. $690,000
ing April 2015, to construct a $18,000,000 building that
is expected to be completed in September 2017, at
an estimated cost of $16,500,000. At the end of 2015,
the costs to date were $7,590,000 and the estimated
total costs to complete had not changed. The progress
billings during 2015 were $3,600,000 and the cash
collected during 2015 was 2,400,000.
~For the year ended December 31, 2015, Cooper would
recognize gross profit on the building of:
a. $632,500
b. $690,000
c. $810,000
d. $0
7. Cooper Construction Company had a contract start- c. $8,280,000
ing April 2015, to construct a $18,000,000 building that
is expected to be completed in September 2017, at
an estimated cost of $16,500,000. At the end of 2015,
the costs to date were $7,590,000 and the estimated
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total costs to complete had not changed. The progress
billings during 2015 were $3,600,000 and the cash
collected during 2015 was 2,400,000.
~At December 31, 2015 Cooper would report Construction in Process in the amount of:
a. $690,000
b. $7,590,000
c. $8,280,000
d. $7,080,000
8. Hayes Construction Corporation contracted to con- c. $900,000 and
struct a building for $4,500,000. Construction began $450,000.
in 2014 and was completed in 2015. Data relating to
the contract are summarized below:
Year ended
December 31,
2014/ 2015
Costs incurred:$1,800,000/ $1,350,000
Estimated costs to complete:1,200,000/—
Hayes uses the percentage-of-completion method as
the basis for income recognition. For the years ended December 31, 2014, and 2015, respectively, Hayes
should report gross profit of
a. $810,000 and $540,000.
b. $2,700,000 and $1,800,000.
c. $900,000 and $450,000.
d. $0 and $1,350,000.
9. Monroe Construction Company uses the percentage-of-completion method of accounting. In 2015,
Monroe began work on a contract it had received
which provided for a contract price of $25,000,000.
Other details follow:
2015
Costs incurred during the year: $12,000,000
Estimated costs to complete as of December 31:
8,000,000
Billings during the year: 11,000,000
Collections during the year: 6,500,000
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c. $3,000,000
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What should be the gross profit recognized in 2015?
a. $1,000,000
b. $13,000,000
c. $3,000,000
d. $5,000,000
10. In 2015, Fargo Corporation began construction work b. $280,000
under a three-year contract. The contract price is
$4,800,000. Fargo uses the percentage-of-completion
method for financial accounting purposes. The income to be recognized each year is based on the
proportion of costs incurred to total estimated costs
for completing the contract. The financial statement
presentations relating to this contract at December
31, 2015, follow:
Balance Sheet
Accounts receivable—construction contract billings:
$200,000
Construction in progress: $600,000
Less contract billings: 480,000
Costs and recognized profit in excess of billings:
120,000
Income Statement
Income (before tax) on the contract recognized in 2015
$120,000
~How much cash was collected in 2015 on this contract?
a. $200,000
b. $280,000
c. $40,000
d. $480,000
11. In 2015, Fargo Corporation began construction work d. $960,000
under a three-year contract. The contract price is
$4,800,000. Fargo uses the percentage-of-completion
method for financial accounting purposes. The income to be recognized each year is based on the
proportion of costs incurred to total estimated costs
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for completing the contract. The financial statement
presentations relating to this contract at December
31, 2015, follow:
Balance Sheet
Accounts receivable—construction contract billings:
$200,000
Construction in progress: $600,000
Less contract billings: 480,000
Costs and recognized profit in excess of billings:
120,000
Income Statement
Income (before tax) on the contract recognized in 2015
$120,000
~What was the initial estimated total income before
tax on this contract?
a. $600,000
b. $640,000
c. $800,000
d. $960,000
12. Adler Construction Co. uses the percentage-of-com- c. $1,620,000
pletion method. In 2014, Adler began work on a con- $960,000
tract for $6,600,000 and it was completed in 2015. Data
on the costs are:
Year Ended December 31
2014/ 2015
Costs incurred: $2,340,000/ $1,680,000
Estimated costs to complete: 1,560,000/—
For the years 2014 and 2015, Adler should recognize
gross profit in 2014 and 2015 of
2014 2015
a. $0 $2,580,000
b. $1,548,000 $1,032,000
c. $1,620,000 $960,000
d. $1,620,000 $2,580,000
13. Gomez, Inc. began work in 2014 on contract #3814,
which provided for a contract price of $14,400,000.
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b. $1,200,000.
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Other details follow:
2014/ 2015
Costs incurred during the year $2,400,000/ $7,350,000
Estimated costs to complete, as of December 31:
7,200,000/0
Billings during the year 2,700,000/ 10,800,000
Collections during the year 1,800,000/ 11,700,000
~Assume that Gomez uses the percentage-of-completion method of accounting. The portion of the total
gross profit to be recognized as income in 2014 is
a. $900,000.
b. $1,200,000.
c. $3,600,000.
d. $4,800,000.
14. Gomez, Inc. began work in 2014 on contract #3814, c. $4,650,000.
which provided for a contract price of $14,400,000.
Other details follow:
2014/ 2015
Costs incurred during the year $2,400,000/ $7,350,000
Estimated costs to complete, as of December 31:
7,200,000/0
Billings during the year 2,700,000/ 10,800,000
Collections during the year 1,800,000/ 11,700,000
~Assume that Gomez uses the completed-contract
method of accounting. The portion of the total gross
profit to be recognized as income in 2015 is
a. $1,800,000.
b. $2,700,000.
c. $4,650,000.
d. $14,400,000.
15. Kiner, Inc. began work in 2014 on a contract for
$16,800,000. Other data are as follows:
2014/ 2015
Costs incurred to date $7,200,000/ $11,200,000
Estimated costs to complete 4,800,000/ —
Billings to date: 5,600,000/ 16,800,000
Collections to date 4,000,000/ 14,400,000
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a. $2,880,000.
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~If Kiner uses the percentage-of-completion method,
the gross profit to be recognized in 2014 is
a. $2,880,000.
b. $3,200,000.
c. $4,320,000.
d. $4,800,000.
16. Kiner, Inc. began work in 2014 on a contract for
$16,800,000. Other data are as follows:
2014/ 2015
Costs incurred to date $7,200,000/ $11,200,000
Estimated costs to complete 4,800,000/ —
Billings to date: 5,600,000/ 16,800,000
Collections to date 4,000,000/ 14,400,000
~If Kiner uses the completed-contract method, the
gross profit to be recognized in 2015 is
a. $2,720,000.
b. $5,600,000.
c. $2,800,000.
d. $11,200,000.
b. $5,600,000.
17. Horner Construction Co. uses the percentage-of-com- a. $2,400,000.
pletion method. In 2014, Horner began work on a contract for $16,500,000; it was completed in 2015. The
following cost data pertain to this contract:
Year Ended December 31
2014/ 2015
Cost incurred during the year $5,850,000/ $4,200,000
Estimated costs to complete at the end of year:
3,900,000/—
~The amount of gross profit to be recognized on the
income statement for the year ended December 31,
2015 is
a. $2,400,000.
b. $2,580,000.
c. $2,700,000.
d. $6,450,000.
18.
c. $0. $6,450,000
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Horner Construction Co. uses the percentage-of-completion method. In 2014, Horner began work on a contract for $16,500,000; it was completed in 2015. The
following cost data pertain to this contract:
Year Ended December 31
2014/ 2015
Cost incurred during the year $5,850,000/ $4,200,000
Estimated costs to complete at the end of year:
3,900,000/—
~If the completed-contract method of accounting was
used, the amount of gross profit to be recognized for
years 2014 and 2015 would be
2014 2015
a. $6,750,000. $0.
b. $6,450,000. $(300,000).
c. $0. $6,450,000.
d. $0. $6,750,000.
19. Remington Construction Company uses the percent- b. $7,500,000.
age-of-completion method. During 2014, the company entered into a fixed-price contract to construct a
building for Sherman Company for $24,000,000. The
following details pertain to the contract:
At December 31, 2014/ At December 31, 2015
Percentage of completion: 25%/ 60%
Estimated total cost of contract: $18,000,000/
$20,000,000
Gross profit recognized to date: 1,500,000/ 2,400,000
The amount of construction costs incurred during
2015 was
a. $12,000,000.
b. $7,500,000.
c. $4,500,000.
d. $2,000,000.
20. Eilert Construction Company had a contract starting c. $805,000.
April 2015, to construct a $21,000,000 building that
is expected to be completed in September 2016, at
an estimated cost of $19,250,000. At the end of 2015,
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the costs to date were $8,855,000 and the estimated
total costs to complete had not changed. The progress
billings during 2015 were $4,200,000 and the cash
collected during 2015 was $2,800,000. Eilert uses the
percentage-of-completion method.
~For the year ended December 31, 2015, Eilert would
recognize gross profit on the building of
a. $0.
b. $737,917.
c. $805,000.
d. $945,000.
21. Eilert Construction Company had a contract starting a. $9,660,000.
April 2015, to construct a $21,000,000 building that
is expected to be completed in September 2016, at
an estimated cost of $19,250,000. At the end of 2015,
the costs to date were $8,855,000 and the estimated
total costs to complete had not changed. The progress
billings during 2015 were $4,200,000 and the cash
collected during 2015 was $2,800,000. Eilert uses the
percentage-of-completion method.
~At December 31, 2015, Eilert would report Construction in Process in the amount of
a. $9,660,000.
b. $8,855,000.
c. $8,260,000.
d. $805,000.
22. Hiser Builders, Inc. is using the completed-contract b. a $420,000 loss.
method for a $9,800,000 contract that will take two
years to complete. Data at December 31, 2015, the end
of the first year, are as follows:
Costs incurred to date: $4,480,000
Estimated costs to complete: 5,740,000
Billings to date: 4,200,000
Collections to date: 3,500,000
The gross profit or loss that should be recognized for
2015 is
a. $0.
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b. a $420,000 loss.
c. a $210,000 loss.
d. a $184,800 loss.
23. Gorman Construction Co. began operations in 2015. c. Gross profit,
Construction activity for 2015 is shown below. Gor- $1,575,000
man uses the completed-contract method.
Contract/Contract Price/Billings thru 12/31/15/Collectings thru 12/31/15/Costs to 12/31/15/EstCost to complete
1 /$4,800,000/ $4,725,000/$3,900,000/$3,225,000/—
2 /3,600,000/ 1,500,000/ 1,000,000/ 820,000/ $1,880,000
3 3,300,000/1,900,000/ 1,800,000/ 2,250,000/ 1,200,000
~Which of the following should be shown on the income statement for 2015 related to Contract 1?
a. Gross profit, $675,000
b. Gross profit, $1,500,000
c. Gross profit, $1,575,000
d. Gross profit, $900,000
24. Gorman Construction Co. began operations in 2015. c. Current liability,
Construction activity for 2015 is shown below. Gor- $680,000
man uses the completed-contract method.
Contract/Contract Price/Billings thru 12/31/15/Collectings thru 12/31/15/Costs to 12/31/15/EstCost to complete
1 /$4,800,000/ $4,725,000/$3,900,000/$3,225,000/—
2 /3,600,000/ 1,500,000/ 1,000,000/ 820,000/ $1,880,000
3 3,300,000/1,900,000/ 1,800,000/ 2,250,000/ 1,200,000
~Which of the following should be shown on the balance sheet at December 31, 2015 related to Contract
2?
a. Inventory, $680,000
b. Inventory, $820,000
c. Current liability, $680,000
d. Current liability, $1,500,000
25. Gorman Construction Co. began operations in 2015. a. Inventory,
Construction activity for 2015 is shown below. Gor- $200,000
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man uses the completed-contract method.
Contract/Contract Price/Billings thru 12/31/15/Collectings thru 12/31/15/Costs to 12/31/15/EstCost to complete
1 /$4,800,000/ $4,725,000/$3,900,000/$3,225,000/—
2 /3,600,000/ 1,500,000/ 1,000,000/ 820,000/ $1,880,000
3 3,300,000/1,900,000/ 1,800,000/ 2,250,000/ 1,200,000
~Which of the following should be shown on the balance sheet at December 31, 2015 related to Contract
3?
a. Inventory, $200,000
b. Inventory, $350,000
c. Inventory, $2,100,000
d. Inventory, $2,250,000
26. Oliver Co. uses the installment-sales method to
d. $300 gain.
record the sale of dining room sets. When an account
had a balance of $14,000, no further collections could
be made and the dining room set was repossessed.
At that time, it was estimated that the dining room set
could be sold for $4,000 as repossessed, or for $5,000
if the company spent $500 reconditioning it. The gross
profit rate on this sale was 70%. The gain or loss on
repossession was a
a. $9,800 loss.
b. $10,000 loss.
c. $1,000 gain.
d. $300 gain.
27. Spicer Corporation has a normal gross profit on in- b. a $4,400 loss.
stallment sales of 30%. A 2013 sale resulted in a default early in 2015. At the date of default, the balance of
the installment receivable was $32,000, and the repossessed merchandise had a fair value of $18,000. Assuming the repossessed merchandise is to be recorded at fair value, the gain or loss on repossession
should be
a. $0.
b. a $4,400 loss.
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c. a $4,400 gain.
d. a $10,000 loss.
28. Fryman Furniture uses the installment-sales method. a. $6,400.
No further collections could be made on an account
with a balance of $24,000. It was estimated that the
repossessed furniture could be sold as is for $7,200,
or for $8,400 if $400 were spent reconditioning it. The
gross profit rate on the original sale was 40%. The loss
on repossession was
a. $6,400.
b. $6,000.
c. $16,000.
d. $16,800.
29. Melton Company sold some machinery to Addison b. $79,247
Company on January 1, 2014. The cash selling price
would have been $947,700. Addison entered into an
installment sales contract which required annual payments of $250,000, including interest at 10%, over five
years. The first payment was due on December 31,
2014. What amount of interest income should be included in Melton's 2015 income statement (the second
year of the contract)?
a. $25,000
b. $79,247
c. $50,000
d. $69,770
30. Carperter Company has used the installment method b. $ 504,000.
of accounting since it began operations at the beginning of 2015. The following information pertains to its
operations for 2015:
Installment sales: $ 2,800,000
Cost of installment sales: 1,960,000
Collections of installment sales: 1,120,000
General and administrative expenses: 280,000
The amount to be reported on the December 31, 2015
balance sheet as Deferred Gross Profit should be
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a. $ 336,000.
b. $ 504,000.
c. $ 672,000.
d. $1,680,000.
31. Daily, Inc. appropriately used the installment method b. $152,000
of accounting to recognize income in its financial statement. Some pertinent data relating to this
method of accounting include:
2014/2015
Installment sales: $750,000/ $900,000
Cost of sales: 450,000/ 630,000
Gross profit:$300,000/ $270,000
Collections during year:
On 2014 sales: 200,000/ 200,000
On 2015 sales: 240,000
What amount to be realized gross profit should be
reported on Daily's income statement for 2015?
a. $132,000
b. $152,000
c. $176,000
d. $216,000
32. Sutton Company sells plasma-screen televisions on d. $ 600.
an installment basis and appropriately uses the installment-sales method of accounting. A customer
with an account balance of $2,400 refuses to make any
more payments and the merchandise is repossessed.
The gross profit rate on the original sale is 40%. Sutton estimates that the television can be sold as is for
$750, or for $900 if $60 is spent to refurbish it. The loss
on repossession is
a. $1,650.
b. $960.
c. $ 690.
d. $ 600.
33. During 2014, Vaughn Corporation sold merchandise costing $2,250,000 on an installment basis for
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$3,000,000. The cash receipts related to these sales
were collected as follows: 2014, $1,200,000; 2015,
$1,050,000; 2016, $750,000.
~What is the rate of gross profit on the installment
sales made by Vaughn Corporation during 2014?
a. 75%
b. 60%
c. 40%
d. 25%
34. During 2014, Vaughn Corporation sold merchana. $ 165,000
dise costing $2,250,000 on an installment basis for
$3,000,000. The cash receipts related to these sales
were collected as follows: 2014, $1,200,000; 2015,
$1,050,000; 2016, $750,000.
~If expenses, other than the cost of the merchandise
sold, related to the 2014 installment sales amounted to $135,000, by what amount would Vaughn's net
income for 2014 increase as a result of installment
sales?
a. $ 165,000
b. $ 266,250
c. $ 300,000
d. $1,065,000
35. During 2014, Vaughn Corporation sold merchand. $262,500 and
dise costing $2,250,000 on an installment basis for $187,500
$3,000,000. The cash receipts related to these sales
were collected as follows: 2014, $1,200,000; 2015,
$1,050,000; 2016, $750,000.
~What amount would be shown in the December 31,
2015 financial statement for realized gross profit on
2014 installment sales, and deferred gross profit on
2014 installment sales, respectively?
a. $262,500 and $562,500
b. $487,500 and $262,500
c. $562,500 and $187,500
d. $262,500 and $187,500
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36. During 2014, Martin Corporation sold merchandise
costing $3,500,000 on an installment basis for
$5,000,000. The cash receipts related to these sales
were collected as follows: 2014, $2,000,000; 2015,
$1,750,000; 2016, $1,250,000.
~What is the rate of gross profit on the installment
sales made by Martin Corporation during 2014?
a. 30%
b. 40%
c. 60%
d. 70%
a. 30%
37. During 2014, Martin Corporation sold merchandise
d. $ 400,000
costing $3,500,000 on an installment basis for
$5,000,000. The cash receipts related to these sales
were collected as follows: 2014, $2,000,000; 2015,
$1,750,000; 2016, $1,250,000.
~If expenses, other than the cost of the merchandise
sold, related to the 2014 installment sales amounted to $200,000, by what amount would Martin's net
income for 2014 increase as a result of installment
sales?
a. $1,800,000
b. $ 600,000
c. $ 450,000
d. $ 400,000
38. During 2014, Martin Corporation sold merchandise
a. $525,000 and
costing $3,500,000 on an installment basis for
$375,000
$5,000,000. The cash receipts related to these sales
were collected as follows: 2014, $2,000,000; 2015,
$1,750,000; 2016, $1,250,000.
~What amount would be shown in the December 31,
2015 financial statements for realized gross profit on
2014 installment sales, and deferred gross profit on
2014 installment sales, respectively?
a. $525,000 and $375,000
b. $975,000 and $525,000
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c. $375,000 and $1,125,000
d. $525,000 and $1,125,000
39. Coaster manufactures and sells logging equipment. c. $1,120,000
Due to the nature of its business, Coaster is unable
to reliably predict bad debts. During 2014, Coaster
sold equipment costing $4,800,000 for $7,200,000. The
terms of the sale were 20% down, with equal payments
due quarterly over the next 3 years. All payments for
2014 were made on schedule. Round answers to two
places.
~Assuming that Coaster uses the installment-sales
method of accounting for its installment sales, what
amount of realized gross profit will Coaster report in
its income statement for the year ended December 31,
2014?
a. $3,360,000
b. $2,240,000
c. $1,120,000
d. $ 739,200
40. Coaster manufactures and sells logging equipment. b. $ 480,000
Due to the nature of its business, Coaster is unable
to reliably predict bad debts. During 2014, Coaster
sold equipment costing $4,800,000 for $7,200,000. The
terms of the sale were 20% down, with equal payments
due quarterly over the next 3 years. All payments for
2014 were made on schedule. Round answers to two
places.
~Assuming that Coaster uses the cost-recovery
method of accounting for its installment sales, what
amount of realized gross profit will Coaster report in
its income statement for the year ended December 31,
2015?
a. $0
b. $ 480,000
c. $ 633,600
d. $1,920,000
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Chapter 18 Multiple Choice- Computational
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41. On January 1, 2015, Shaw Co. sold land that cost
a. $0
$840,000 for $1,120,000, receiving a note bearing interest at 10%. The note will be paid in three annual installments of $450,380 starting on December 31, 2015.
Because collection of the note is very uncertain, Shaw
will use the cost-recovery method. How much revenue
from this sale should Shaw recognize in 2015?
a. $0
b. $84,000
c. $112,000
d. $280,000
42. In 2012, Concord Inc. sells inventory with a cost of
$32,000 for $50,000. Concord will receive payments of
$14,000 in 2012, $26,000 in 2013, and $10,000 in 2014. If
the cost-recovery method applies to this transaction,
what would be the journal entry to recognize gross
profit at the end of 2013?
a.Deferred Gross Profit:10,000
Realized Gross Profit: 10,000
b.Realized Gross Profit:18,000
Deferred Gross Profit: 18,000
c.Sales Revenue 50,000
Cost of sales 32,000
Deferred Gross Profit 18,000
d.Deferred Gross Profit8,000
Realized Gross Profit8,000
d.Deferred Gross
Profit8,000
Realized Gross
Profit8,000
43. On January 1, 2015 Dairy Treats, Inc. entered into
c.Cash 912,000
a franchise agreement with a company allowing the Franchise Fee
company to do business under Dairy Treats's name. Revenue 840,000
Dairy Treats had performed substantially all required Revenue from
services by January 1, 2015, and the franchisee paid Franchise Fees
the initial franchise fee of $840,000 in full on that date. 57,600
The franchise agreement specifies that the franchisee Unearned Franmust pay a continuing franchise fee of $72,000 annual- chise Fees 14,400
ly, of which 20% must be spent on advertising by Dairy
Treats. What entry should Dairy Treats make on January 1, 2015 to record receipt of the initial franchise fee
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Chapter 18 Multiple Choice- Computational
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and the continuing franchise fee for 2015?
a.Cash 912,000
Franchise Fee Revenue 840,000
Revenue from Franchise Fees 72,000
b.Cash 912,000
Unearned Franchise Fees 912,000
c.Cash 912,000
Franchise Fee Revenue 840,000
Revenue from Franchise Fees 57,600
Unearned Franchise Fees 14,400
d.Prepaid Advertising 14,400
Cash 912,000
Franchise Fee Revenue 840,000
Revenue from Franchise Fees 72,000
Unearned Franchise Fees 14,400
44. Wynne Inc. charges an initial franchise fee of
b. $1,443,744.
$1,840,000, with $400,000 paid when the agreement is
signed and the balance in five annual payments. The
present value of the future payments, discounted at
10%, is $1,091,744. The franchisee has the option to
purchase $240,000 of equipment for $192,000. Wynne
has substantially provided all initial services required
and collectibility of the payments is reasonably assured. The amount of revenue from franchise fees is
a. $ 400,000.
b. $1,443,744.
c. $1,491,744.
d. $1,840,000.
45. On May 1, 2015, TV Inc. consigned 80 TVs to Ed's TV. d. $29,375.
The TVs cost $450. Freight on the shipment paid by
Ed's TV was $1,000. On July 10, TV Inc. received an account sales and $21,500 from Ed's TV. Thirty TVs had
been sold and the following expenses were deducted:
Freight $1,000
Commission (20% of sales price) ?
Advertising 650
Delivery 350
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Chapter 18 Multiple Choice- Computational
Study online at https://quizlet.com/_1nidd7
~The total sales price of the TVs sold by Ed's TV was
a. $25,625.
b. $26,875.
c. $27,313.
d. $29,375.
46. On May 1, 2015, TV Inc. consigned 80 TVs to Ed's TV. a. TV Inc./ $23,125
The TVs cost $450. Freight on the shipment paid by
Ed's TV was $1,000. On July 10, TV Inc. received an account sales and $21,500 from Ed's TV. Thirty TVs had
been sold and the following expenses were deducted:
Freight $1,000
Commission (20% of sales price) ?
Advertising 650
Delivery 350
~The inventory of TVs will be reported on whose balance sheet and at what amount?
Balance Sheet of / Amount of Inventory
a. TV Inc./ $23,125
b. TV Inc./ $22,500
c. Ed's TV/ $23,125
d. Ed's TV/ $22,500
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