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Jupiter Company sells goods that have a cost of $500,000 to Danone Inc. for $700,000, with

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Question;1) Jupiter Company sells goods that have a cost of $500,000 to Danone Inc. for $700,000, with payment due in 1 year. The cash price for these goods is $610,000, with payment due in 30 days. If Danone paid immediately upon delivery, it would receive a cash discount of $10,000.(a) Prepare the journal entry to record this transaction at the date of sale.(b) How much revenue should Jupiter report for the entire year?2) Taylor Marina has 300 available slips that rent for $800 per season. Payments must be made in full at the start of the boating season, April 1, 2015. Slips for the next season may be reserved if paid for by December 31, 2014. Under a new policy, if payment is made by December 31, 2014, a 5% discount is allowed. The boating season ends October 31, and the marina has a December 31 year-end. To provide cash flow for major dock repairs, the marina operator is also offering a 20% discount to slip renters who pay for the 2016 season.For the fiscal year ended December 31, 2014, all 300 slips were rented at full price. 200 slips were reserved and paid for the 2015 boating season, and 60 slips for the 2016 boating season were reserved and paid for.Prepare the appropriate journal entries for fiscal 2014.3) Reynolds Custom Builders (RCB) was established in 1987 by Avery Conway and initially built high-quality customized homes under contract with specific buyers. In the 2002s, Conway?s two sons joined the company and expanded RCB?s activities into the high-rise apartment and industrial plant markets. Upon the retirement of RCB?s long-time financial manager, Conway?s sons recently hired Ed Borke as controller for RCB. Borke, a former college friend of Conway?s sons, has been associated with a public accounting firm for the last 6 years.Upon reviewing RCB?s accounting practices, Borke observed that RCB followed the completed-contract method of revenue recognition, a carryover from the years when individual home building was the majority of RCB?s operations. Several years ago, the predominant portion of RCB?s activities shifted to the high-rise and industrial building areas. From land acquisition to the completion of construction, most building contracts cover several years. Under the circumstances, Borke believes that RCB should follow the percentage-of-completion method of accounting. From a typical building contract, Borke developed the following data.BLUESTEM TRACTOR PLANT - Contract price: $8,000,000Estimated costs 2014-$1,600,000, 2015-$2,880,000, 2016- $1,920,000Progress billings 2014-$1,000,000, 2015- $2,500,000, 2016- $4,500,000Cash collections 2014- $800,000, 2015- $2,300,000, 2016- $4,900,000(b) Using the data provided for the Bluestem Tractor Plant and assuming the percentage-of-completion method of revenue recognition is used, calculate RCB?s revenue and gross profit for 2014, 2015, and 2016, under each of the following circumstances.(1) Assume that all costs are incurred, all billings to customers are made, and all collections from customers are received within 30 days of billing, as planned.(2) Further assume that, as a result of unforeseen local ordinances and the fact that the building site was in a wetlands area, RCB experienced cost overruns of $800,000 in 2014 to bring the site into compliance with the ordinances and to overcome wetlands barriers to construction.(3) Further assume that, in addition to the cost overruns of $800,000 for this contract incurred under part (b)(2), inflationary factors over and above those anticipated in the development of the original contract cost have caused an additional cost overrun of $850,000 in 2015. It is not anticipated that any cost overruns will occur in 2016.

 

Paper#52040 | Written in 18-Jul-2015

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