1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Ksenya-84 [330]
3 years ago
11

Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,650,000. The project began in 2021 a

nd was completed in 2022. Data relating to the contract are summarized below:
2021 2022
Costs incurred during the year $ 352,000 $ 2,025,000
Estimated costs to complete as of 12/31 1,408,000 0
Billings during the year 470,000 1,750,000
Cash collections during the year 405,000 1,815,000

Required:
1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time according to percentage of completion.
2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming this project does not qualify for revenue recognition over time.
3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2021 assuming Nortel recognizes revenue over time according to percentage of completion.
4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2021 assuming this project does not qualify for revenue recognition over time.
Business
1 answer:
nata0808 [166]3 years ago
8 0

Answer:

Multiple Answers

Explanation:

1. Over Time

a) Begin w/ Percentage of Revenue Method:

Actual Costs to Date / Estimated Total Costs = % Complete to Date

2021:

$352,000 / ($352,000 + $1,408,000) =

$352,000 / $1,760,000 = 20%

2022:

($352,000 + $2,025,000) / ($352,000 + $2,025,000)

$2,377,000 / $2,377,000 = 100%

b)

2021:

Construction Revenue: (20% * $2,650,000) = $530,000

Less: Construction Expenses: $352,000

Gross Profit: $178,000

c)

2022 (subtract out 2021 costs):

Construction Revenue: $2,650,000 - $530,000 = $2,120,000

Less: Construction Expenses: $2,377,000 - $352,000 = $2,025,000

Gross Profit: $273,000 - $178,000 = $95,000

2.  Upon Completion:

2021:

Revenue: $0

Gross Profit: $0

2022:

Revenue: $2,650,000

Gross Profit: $273,000

3. Over Time:

Current Assets:

   A/R: $470,000 - $405,000 = $65,000

   Costs & Profits in Excess of Billings:  $530,000 - $470,000 = $60,000

4. Upon Completion:

Current Assets:

     A/R: $470,000 - $405,000 = $65,000

Current Liabilities:

    Billings in Excess of Profit & Cash: $470,000 - $352,000 = $118,000

You might be interested in
The aggregate expenditures model assumes flexible prices true or false
Murljashka [212]
The answer to this is true
4 0
3 years ago
Read 2 more answers
The bank statement contained two bank memoranda:1. A credit of $2,242.00 for the collection for Bogalusa Company of an electroni
serious [3.7K]

Answer:

Cash                         2,157 debit

bank service expense 85 debit

   account receivables 2,242 credit

Explanation:

To record the bank memorand:

The collection in behalf of the firm will increase cash

The new print the checks will be considered either miscellaneuos expense or bank service expense either way, will decrease cash.

Net cash variation: 2,242 - 85 = 2,157

For the Company errors another entry will be made looking for errors between our numebrs and the bank.

5 0
3 years ago
What do you want to be when you a grow up? I want to be a model or a fitness model or a boxer or a professional tahitian dancer
ra1l [238]
I haven’t decided exactly what I wanna do yet, but here are my options:

-Interior designer
-Psychology counseling
-Fashion designer
-Small business owner (cafe?)
-Or something in the cosmetic indestry
5 0
3 years ago
Mountain Products has decided to raise $6 million via a rights offering. The company will issue one right for each share of stoc
storchak [24]
I think the answer is E
4 0
3 years ago
After all revenue and expense accounts have been closed at the end of the fiscal year, Income Summary has a debit of $2,450,000
murzikaleks [220]

Answer:

income summary   550  debit

     retained earnings      550 credit

--to close income sumary against RE--

Explanation:

To complete the closing entries we should determinate the balance of the Income Summary account and then, transfer into Retained Earnings.

 Income Summary

<u>   Debit        Credit   </u>

2,450

<u>                    3,000    </u>

Balance          550

We will debit income summary so his blanace ends in zero and credit retained earnings so net income is accumualted and added into equity to represent it in the balance sheet.

7 0
3 years ago
Other questions:
  • A good reason for cutting meats and poultry into thin slices for sandwiches is that
    7·1 answer
  • Mendoza Company's highest point of total cost was $80,000 in June. Their point of lowest cost was $65,000 in January. The compan
    14·1 answer
  • Channel richness is, in part, determined by the ability to facilitate rapid, two-way feedback.
    7·1 answer
  • ECONOMICS, PLEASE HELP.
    9·1 answer
  • Maurice has the following utility function: U (X Y) =20X+80Y-X^2-2Y^2, where X is his consumption of CDs with a price of ​$11 an
    9·1 answer
  • During June, Buttrey Corporation incurred $86,000 of direct labor costs and $26,000 of indirect labor costs. The journal entry t
    12·1 answer
  • The foreign exchange market is a market for converting the currency of one country into that of another country.
    14·1 answer
  • For the current year temporary differences existed between the financial statement carrying amounts and the tax basis of the fol
    6·1 answer
  • For federal tax purposes, which of the following is true regarding lump-sum life insurance benefits?
    9·1 answer
  • Clemson University Urgently needed $30 million to properly execute a student testing plan during fall of 2020. Clemson approache
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!