1.

Question :

(TCO A) Platypus Building Inc. won a bid for a new office building
contract. Below is info from the project accountant:
Total Construction Fixed Price
Construction Start Date
Construction Complete Date
As of Dec 31
Actual cost incurred
Estimated remaining costs
Billed to customer
Received from customer

$8,000,000
March 3, 2012
December 4, 2013
2012
$2,500,000
$3,750,000
$2,400,000
$2,250,000

2013
$3,150,000
$$5,300,000
$5,400,000

Assuming Platypus Building Inc. uses the completed contract method,

what amount of gross profit would be recognized in 2013?

Student Answer:

$2,000,000
$2,350,000
$1,650,000
$940,000

Instructor
Explanation:

Points Received:

Chapter 18. 8000000 (2500000 + 3150000)

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Comments:

Question 2. Question :

(TCO A) Kerry Corp purchased a used bottling machine from Bob's

Bottling Inc. on Jan 1, 2012 for $900000. Bob accounted for the sale
correctly under the installment sales method. It had a book value of
$675000. Kerry paid with $300000 cash and a note for $600000 with
an annual interest of 10%. Kerry agreed to make equal annual
payments of $200000. Kerry Corp made their first payment on Jan 1,
2013 of $260000 which included interest of $60000 to date of payment.
As of Dec 31, 2013 Bob has deferred gross profit of ?

Student Answer:

$85,000

$100,000
$175,000
$160,000
Instructor
Explanation:

Points Received:

Chapter 18.

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Comments:

Question 3. Question :

(TCO A) Blue Suede Construction Corp used the percentage-ofcompletion method of revenue recognition. They were contracted to
build the new amphitheater for $4500000. Additional information was
provided:
As of Dec 31.
Percentage of completion
Estimated total expected costs
Gross profit recognized (Cumulative)

2012
35%
$3,750,000
$225,000

Contracted costs incurred during 2013 were

Student Answer:

$975,000
$2,340,000
$825,000
$1,027,500

Instructor
Explanation:

Points Received:
Comments:

Chapter 18

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2013
60%
$3,900,000
$300,000

Question 4. Question :

(TCO A) Revenue should NOT be recognized at the time of sale if

Student Answer:

goods were purchased with a credit card payment

the buyer has sixty days to return the goods and the amount of
future returns cannot be estimated
the selling price is substantially less than the normal selling price
none of the above

Instructor
Explanation:

Points Received:
Comments:

Chapter 18

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