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5/27/2018 IntermediateAccountingE18-14-slidepdf.com http://slidepdf.com/reader/full/intermediate-accounting-e18-14 1/11 Extensive detail and information is contained within the help function of Microsoft Excel and in the provided text. You should enter your name, date, instructor's name, and course into the cells at the top of the page. This information will be  printed on the top of each page if the template requires more than one page. If more than one page is required by the template, manual page breaks have been set to provide consistent presentation. And information or data which may be required by the solution will be entered in cells with borders to help identify them. Where a highlighted cell shows "Acct Nbr" enter the appropriate account number, provided in the template and in the text for that step of the challenge. This is entry may be a "Look to" formula to another cell where that information has been provided or previously entered. Where a highlighted cell shows "Account Title" enter the appropriate account title for that step of the challenge. This is a text entry and most of those cells are set for the proper indentation for that step. Frequently the chart of accounts appropriate to the challenge is provided and you can use the "look to" formula to reference the appropriate account title without typing it. Check with your instructor to see if abbreviated account titles are acceptable. For example "A/R" for Accounts Receivable, "A/P" for Accounts Payable. If your instructor is using a comparison process between workbooks for grading, these abbreviates may not be acceptable. Where a highlighted cell shows titles such as "Values," "Amounts," or "Quantities" enter the appropriate numerical value for that step of the challenge. The cell is formatted for proper presentation of the entered information. If a dollar sign is appropriate, it should not be entered, Microsoft Excel will place it there through formatting. Commas and significant digits (decimals) are also set through formatting for common presentation. Since the formatting of the templates is not protected by an assword, ou ma chan e an of the formattin found in the tem lates to meet our desires. Where a highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference, "=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. Be advised, the template work boo ks and w orksh eets are not protected. Overtyping any data may remove it. Each template is set to print with File Name, Page # of # Page(s), the print date, and the print time to assist in assembly of multiple pages.  All of the cells have been correctly formatted for presentation and should not require any adjustment. For example, if the text requires one, two, or three significant digits in a presentation, the template has been set for that presentation in the appropriate cells. In general, the highlighted cells are the cells which work and effort should be presented. These entries may include date(s), account title(s), values, memorandum appropriate to the entry, or text answers to questions. Where a highlighted cell shows "Date" enter the appropriate date for that step of the challenge. This may be any date format that Microsoft Excel accepts. Some of these formats include "1/1/12", "01/01/12", and "01/01/2012." All of these will return January 01, 2012, in the format set in the template.

Intermediate Accounting E18-14

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E18-14 completed (Wiley Intermediate Accounting)

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Be advised, the template workbooks and worksheets are not protected.Overtyping any data may remove it.

Extensive detail and information is contained within the help function of Microsoft Excel and in the provided text.You should enter your name, date, instructor's name, and course into the cells at the top of the page. This information will be printed on the top of each page if the template requires more than one page.Each template is set to print with File Name, Page # of # Page(s), the print date, and the print time to assist in assembly of multiple pages.

If more than one page is required by the template, manual page breaks have been set to provide consistent presentation.All of the cells have been correctly formatted for presentation and should not require any adjustment. For example, if the text requires one, two, or three significant digits in a presentation, the template has been set for that presentation in the appropriate cells.

In general, the highlighted cells are the cells which work and effort should be presented. These entries may include date(s), account title(s), values, memorandum appropriate to the entry, or text answers to questions.

And information or data which may be required by the solution will be entered in cells with borders to help identify them.Where a highlighted cell shows "Date" enter the appropriate date for that step of the challenge. This may be any date format that Microsoft Excel accepts. Some of these formats include "1/1/12", "01/01/12", and "01/01/2012." All of these will return January 01, 2012, in the format set in the template.

Where a highlighted cell shows "Acct Nbr" enter the appropriate account number, provided in the template and in the text for that step of the challenge. This is entry may be a "Look to" formula to another cell where that information has been provided or previously entered.

Where a highlighted cell shows "Account Title" enter the appropriate account title for that step of the challenge. This is a text entry and most of those cells are set for the proper indentation for that step. Frequently the chart of accounts appropriate to the challenge is provided and you can use the "look to" formula to reference the appropriate account title without typing it.

Check with your instructor to see if abbreviated account titles are acceptable. For example "A/R" for Accounts Receivable, "A/P" for Accounts Payable. If your instructor is using a comparison process between workbooks for grading, these abbreviates may not be acceptable.

Where a highlighted cell shows titles such as "Values," "Amounts," or "Quantities" enter the appropriate numerical value for that step of the challenge. The cell is formatted for proper presentation of the entered information. If a dollar sign is appropriate, it should not be entered, Microsoft Excel will place it there through formatting. Commas and significant digits (decimals) are also set through formatting for common presentation. Since the formatting of the templates is not protected by any password, you may change any of the formatting found in the templates to meet your desires.

Where a highlighted cell shows titles such as "Formula" you may enter the appropriate formula or enter a numerical value appropriate for that step of the challenge. Most of the values necessary for the appropriate formula are located on the template in cells with borders or in other yellow highlighted cells. The formula may be a simple "Look to" formula, an equal sign and a cell reference, "=E27" or more complex as "=E27*5," or something similar to the time-value-of-money formula. These are addressed in the tutorial text provided for Microsoft Excel.

Where a highlighted cell shows "Text" enter the appropriate text for that step of the challenge. This may be a memorandum entry for a journal entry or a lengthy text answer discussing the results of an analysis of a company's financials. These titles can simply be typed over.

Where a highlighted cell shows titles such as "Journal Number" or "Journ #" you should enter the appropriate number provided in the template and in the text for that step of the challenge. In general this will appear in instances such as "Record the following events in General Journal number six."

The print area is defined to fit onto 8 1/2" 11" sheets in portrait or landscape mode as required. Margins are generally set to no less than 1/2" so most printers can print them without a problem. If you printer cannot accept margins less than 1" you may have to reformat the margins through Page Setup.

The display may have "Freeze Pane" invoked so column titles remain visible during data entry. This can be removed by utilizing the View menu and selecting "Unfreeze Panes" under "Freeze Panes."

When negative values are required, enter them by starting with a minus sign, "-". Negative values may be shown as ($400) or -$400. Negative values in formulas can be created by putting a minus sign in front of the cell reference - "=E10*-E11" will return a negative value if both cells E10 and E11 contain positive values.

Exercise 18-7

Name:Date:Instructor:Course:Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield

E18-7 (Sales Recorded Both Gross and Net) On June 3, Hunt Company sold to Ann Mount merchandise having a sales price of$8,000with terms of 2/10, n/60, f.o.b. shipping point. An invoice totaling$120, terms n/30, was received by Mount on June 8 from the Olympic Transport Service for the freight cost. Upon receipt of the goods, June 5, Mount notified Hunt Company that merchandise costing$600contained flaws that rendered it worthless. The same day, Hunt Company issued a credit memo covering the worthless merchandise and asked that it be returned at company expense. The freight on the returned merchandise was $24paid by Hunt Company on June 7. On June 12, the company received a check for the balance due from Mount.

Instructions:(a)(1) Prepare journal entries on Hunt Company books to record all the events noted above under the sales and receivables are entered at gross selling price concept.

Jun 3Account TitleAmountAccount TitleAmount

Jun 5Account TitleAmountAccount TitleAmount

Jun 7Account TitleAmountAccount TitleAmount

Jun 12Account TitleAmountAccount TitleAmountAccount TitleAmount

(a)(2) Prepare journal entries on Hunt Company books to record all the events noted above under the sales and receivables are entered net of cash discounts concept.

Jun 3Account TitleAmountAccount TitleAmount

Jun 5Account TitleAmountAccount TitleAmount

Jun 7Account TitleAmountAccount TitleAmount

Jun 12Account TitleAmountAccount TitleAmount

(b) Prepare the journal entry under basis 2, assuming that Ann Mount did not remit payment until August 5.

Aug 5Account Title4600AmountAccount TitleAmountAccount TitleAmount

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Exercise 18-14

Name:Date:Instructor:Course:

E18-14 (Gross Profit on Uncompleted Contract) On April 1, 2014, Dougherty Inc. entered into a cost-plus-fixed-fee contract to construct an electric generator for Altom Corporation. At the contract date,

Dougherty estimated that it would take 2 years to complete the project at a cost of $2,000,000The fixed fee stipulated in the contract is$450,000Dougherty appropriately accounts for this contract under the percentage-of-completion method. During 2014, Dougherty incurred costs of $800,000related to the project. The estimated cost at December 31, 2014, to complete the contract is$1,200,000Altom was billed$600,000under the contract.

Instructions:Prepare a schedule to compute the amount of gross profit to be recognized by Dougherty under the contract for the year ended December 31, 2014. Show supporting computations in good form.

DOUGHERTY INC.Computation of Gross Profit to Be Recognized on Uncompleted ContractFor The Year Ended December 31, 2014

Total contract priceEstimate total cost$2,000,000

Fixed fee450,000Total contract price$2,450,000

Total estimated cost$2,000,000Gross profit 450,000Percentage of completetion40%Gross profit to be recognized$180,000

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Problem 18-3

Name:Date:Instructor:Course:Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield

P18-3 (Recognition of Profit and Entries on Long-Term Contract) On March 1, 2014, Chance Company enteredinto a contract to build an apartment building. It is estimated that the building will cost $2,000,000and will take 3 years to complete. The contract price was$3,000,000The following information pertains to the construction period.

201420152016Costs to date:$600,000$1,560,000$2,100,000Estimated costs to complete:1,400,000520,0000Progress billing to date:1,050,0002,000,0003,000,000Cash collected to date:950,0001,950,0002,850,000

Instructions:(a) Compute the amount of gross profit to be recognized each year assuming the percentage-of-completion method is used.

Gross profit recognized in:

2014201520052016Contract priceAmountAmountAmountCosts:Costs to dateAmountAmountAmountEstimated costs to completeAmountFormulaAmountFormulaFormulaTotal estimated profitFormulaFormulaFormulaPercentage completed to dateFormulaFormulaFormulaTotal gross profit recognizedFormulaFormulaFormulaLess: GP recognized in previous yearsAmountFormulaFormulaGross profit recognized in current yearFormulaFormulaFormula

(b) Prepare all necessary journal entries for 2016.

Account TitleAmountAccount TitleAmount

Accounts ReceivableAmountAccount TitleAmount

Account TitleAmountAccount TitleAmount

Account TitleAmountAccount TitleAmountAccount TitleAmount

Account TitleAmountAccount TitleAmount

(c) Prepare a partial balance sheet for December 31, 2015, showing the balances in the receivables and inventory accounts.

CHANCE COMPANYBalance Sheet (Partial)December 31, 2015Current assets:TitleAmountInventoriesTitleAmountLess: TitleAmountCosts and recognized gross profit in excess of billingsFormula

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Problem 18-5

Name:Date:Instructor:Course:Intermediate Accounting, 15th Edition by Kieso, Weygandt, and Warfield

P18-5 (Completed-Contract and Percentage-of-Completion with Interim Loss) Reynolds Custom Builders (RCB) was established in 1987 by Avery Conway and initially built high-quality customized homes under contract with specific buyers. In 2002, Conways two sons joined the company and expanded RCBs activities into the high-rise apartment and industrial plant markets. Upon the retirement of RCBs long-time financial manager, Conways sons recently hired Ed Borke as controller for RCB. Borke, a former college friend of Conways sons, has been associated with a public accounting firm for the last 6 years.

Upon reviewing RCBs 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 RCBs operations. Several years ago, the predominant portion of RCBs 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 PLANTContract price$8,000,000201420152016Estimated costs$1,600,000$2,880,000$1,920,000Progress billings1,000,0002,500,0004,500,000Cash collections800,0002,300,0004,900,000

Instructions:(a) Explain the difference between completed-contract revenue recognition and percentage- of-completion revenue recognition.

Enter text answer here as appropriate.

(b) Using the data provided for the Bluestem Tractor Plant and assuming the percentage-of-completion method of revenue recognition is used, calculate RCBs 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, the RCBs revenue, cost of sales, and gross profit for 2014, 2015, and 2016, are calculated as follows:

Percentage-of-Completion (Cost-to-Cost Basis)($000 omitted)YearContractPriceCoststo DateEstimatedTotal CostsEstimated GrossProfitPercentComplete2014AmountAmountFormulaFormulaFormula2015AmountAmountFormulaFormulaFormula2016AmountAmountFormulaFormulaFormula

Revenue recognitionYearContractPricePercentCompleteRevenueRecognizableLess PriorYear(s)CurrentYear2014AmountFormulaFormulaFormulaFormula 2015AmountFormulaFormulaFormulaFormula2016AmountFormulaFormulaFormulaFormula

Profit recognitionYearEstimatedProfitPercentCompleteProfitRecognizableLess PriorYear(s)CurrentYear2014AmountFormulaFormulaFormulaFormula2015AmountFormulaFormulaFormulaFormula2016AmountFormulaFormulaFormulaFormula

(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$800,000in 2014 to bring the site into compliance with the ordinances and to overcome wetlands barriers to construction.

Percentage-of-Completion (Cost-to-Cost Basis)($000 omitted)YearContractPriceCoststo DateEstimatedTotal CostsEstimated GrossProfitPercentComplete2014AmountAmountAmountFormulaFormula2015AmountAmountAmountFormulaFormula2016AmountAmountAmountFormulaFormula

Revenue recognitionYearContractPricePercentCompleteRevenueRecognizableLess PriorYear(s)CurrentYear2014AmountFormulaFormulaFormulaFormula2015AmountFormulaFormulaFormulaFormula2016AmountFormulaFormulaFormulaFormula

Profit recognitionYearEstimatedProfitPercentCompleteProfitRecognizableLess PriorYear(s)CurrentYear2014AmountFormulaFormulaFormulaFormula2015AmountFormulaFormulaFormulaFormula2016AmountFormulaFormulaFormulaFormula

(3) Further assume that, in addition to the cost overruns of$800,000for 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$850,000in 2015. It is not anticipated that any cost overruns will occur in 2016.

Percentage-of-Completion (Cost-to-Cost Basis)($000 omitted)YearContractPriceCoststo DateEstimatedTotal CostsEstimated GrossProfitPercentComplete2014AmountAmountAmountFormulaFormula2015AmountAmountAmountFormulaFormula2016AmountAmountAmountFormulaFormula

Revenue recognitionYearContractPricePercentCompleteRevenueRecognizableLess PriorYear(s)CurrentYear2014AmountFormulaFormulaFormulaFormula2015AmountFormulaFormulaFormulaFormula2016AmountFormulaFormulaFormulaFormula

Profit recognitionYearEstimatedProfitPercentCompleteProfitRecognizableLess PriorYear(s)CurrentYear2014AmountFormulaFormulaFormulaFormula2015AmountFormulaFormulaFormulaFormula2016AmountFormulaFormulaFormulaFormula

Enter text answer as appropriate.

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