Fitzgerald Finance Assingment Help With Solution
Part 1
Fitzgerald Construction Company is constructing an office building for Lomax Company for $20,000,000 with the following details:
Costs incurred to date $8,000,000 $10,000,000 $14,000,000
Estimated costs to complete 6,000,000 4,000,000 —
Billings to date 8,000,000 16,000,000 20,000,000
Collections to date 6,000,000 12,000,000 18,000,000
Instructions:
- Calculate the estimated total gross profit on the contract as of December 31, 2010, 2011 and 2012 using the percentage-of-completion method.
- Calculate the estimated total gross profit on the contract as of December 31 2010, 2011 and 2012 using the completed-contract-method.
- List one benefit and one drawback each of both the percentage-of-completion method and the completed-contract-method.
Note: You must show all the steps used in determining the gross profit each year.
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Part 2
Below is the information for Percy Corp, which began operations in 2012:
Installment sales 1,500,000 $1,800,000
Gross profit percentage 30% 25%
Cash collections:
From 2012 installment sales $375,000 $750,000
From 2013 installment sales 500,000
Instructions:
Prepare the journal entries to record the sales, inventory cost, deferred gross profit and gross profit recognized on 2012 and 2013 sales and cash collections.
Product Code :Fin327
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