Intermediate Accounting Iii

In: Business and Management

Submitted By Smoothmocha78
Words 2123
Pages 9
Midterm Exam Review
1.The revenue recognition principle provides that revenue is recognized when? Pages 907-8
Dot Point, Inc. is a retailer of washers and dryers and offers a three-year service contract on each appliance sold. Although Dot Point sells the appliances on an installment basis, all service contracts are cash sales at the time of purchase by the buyer. Collections received for service contracts should be recorded when?
An alternative available when the seller is exposed to continued risks of ownership through return of the product is what? Page 910
2. In selecting an accounting method for a newly-contracted long-term construction project, the principal factor to be considered should be what? Page 933
The percentage-of-completion method must be used when certain conditions exist. Review the necessary conditions? Page 912
In accounting for a long-term construction-type contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross profit from the contract, multiplied by the percentage of the costs incurred during the year is what? Page 914 (and Interactive example included in lecture)

3. Melton Construction Co. began operations in 2010. Construction activity for 2010 is shown below. Melton uses the completed-contract method.
Contract Contract Price Billings
Through
12/31/10 Collections
Through
12/31/10 Costs to
12/31/10 Estimated
Costs to
Complete
1 $3,200,000 $3,150,000 $2,600,000 2,150,000 -0-
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 2010 related to Contract 1? Melton Construction Co. began operations in 2010. Construction activity for 2010 is shown below. Melton uses the completed-contract method.
Contract Contract Price…...

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