Big Construction Company signs a contract on 1 July 2019, agreeing to build a warehouse for Buyer Corporation Ltd at a fixed contract price of $10 million. Buyer Ltd will be in control of the asset throughout the construction process. Big Construction Company estimates that construction costs will be as follows: 2019 2.5 million 2020 $4 million 2021 $1.5 million The contract provides that Buyer Corporation Ltd will make payments on 31 December each year as follows: 2019 $2 million 2020 $5 million 2021 $3 million The contract is completed and accepted on 31 December 2021. Assume that actual costs and cash collections coincide with expectations and that cost (an input measure) is used as the basis for assessing progress on the construction contract. Big Construction Company has a financial year ending 31 December. Required: a) Using the above data, compute the gross profit to be recognised for each of the three years, assuming that the outcome of the contract can be reliably estimated. (1.5 marks) b) Prepare the journal entries for 2019, 2020 and 2021 financial year to recognise revenue on the assumption that the measure of progress on the contract can be reliably estimated. c) Prepare the journal entries for 2019, 2020 and 2021 financial year, assuming that the measure of progress on the contract cannot be reliably assessed. (3.5 marks

1. Alpha Ltd has appointed you as a manager in the budgeting department. The company has provided the following information to prepare a cash flow budget for the six months from the 1 January 2021 to 30 June 2021.

1. Alpha Ltd produces only one type of product and the projected selling price of the product is £2 for January and February and after that will be fixed at £3 for the foreseeable future.    
2. For the first three months of the year, 2,000 units will be sold per month. For the following three months, 2,500 units will be sold per month. Sales income is to be received in the month of sale.
3. Insurance costs are £200 every two months. The company will pay for insurance on 1 December 2020.
4. The company is paying 20% of sales of each month as bonus to the employees in the following month. The total sales during December 2020 will be £5,000.
5. Alpha Ltd will pay overhead costs of £2,000 each month.
6. The opening cash balance at 1 January 2021 will be £1,000.
7. The monthly cost of direct material and direct labour is estimated to be £500 and the company will pay them during each month.
8. Fixed costs of production are £100 per month, payable in the month.

1. Prepare a cash flow budget for the period 1 January 2021 to 30 June 2021 and indicate the closing balance as at 30 June 2021.

Laker Company resported the following January Purchases and sales datat for its only product

Required
The company uses a perpetual inventory system. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO. (Round per unit costs and inventory amount to cents.) For specific identification, ending inventory consist of 200 units, where 180 are from the January 30 purchase, 5 are from the January 20 purchase, and 15 are from beginning inventory.

Required information

[The following information applies to the questions displayed below.]
  
Laker Company reported the following January purchases and sales data for its only product.
  

Required:
The Company uses a periodic inventory system. For specific identification, ending inventory consists of 305 units, where 275 are from the January 30 purchase, 5 are from the January 20 purchase, and 25 are from beginning inventory. Determine the cost assigned to ending inventory and to cost of goods sold using (a) specific identification, (b) weighted average, (c) FIFO, and (d) LIFO.

Play Company acquired 70 percent of Screen Corporation's shares on December 31, 20x5, at underlying book value of $98,000. At the date, fair value of the noncontrolling interest was equal to 30 percent of the book value of Screen Corporation. Screen's balance sheet on January 1, 20x8, contained the following balances:

Cash 50,000

Accounts Receivable 35,000

Inventory 40,000

Building/Equipment 300,000

Less:Accumulated Depreciation (100,000)

Total Assets 325,000

Accounts Payable 40,000

Bonds Payable     100,000

Common Stock 50,000

Additional Paid-In Capital 75,000

Retained Earnings 60,000

Total Liabilities and Equities 325,000

On January 1, 20x8, Screen acquired 5,000 of its own $2 par value common shares from Nonaffiliated Corporation for $6 per share.

1. Based on the preceding information, what is the increase in the book value of the equity attributable to the parent as a result of the repurchase of shares by Screen Corporation?

2. Based on the preceding information, what will the journal entry to be recorded on Play Company's books to recognize the change in the book value of the shares it holds?

COMPANY ABC engaged in the following transactions:

It issued $20 million in bonds to purchase a new municipal office building. The proceeds were recorded in a capital projects fund.

It acquired the building for $20 million.

It recognized, as appropriate, $300,000 of depreciation on municipal vehicles.

It transferred $2,060,000 from the general fund to a debt service fund.

It paid $60,000 in interest on long-term debt and repaid $2 million of principal on the same long-term debt.

It sold for $5 million village land that had been acquired for $4 million. The proceeds were recorded in the general fund.

REQUIRED:

Answer the following question based on the transactions outlined:

1. For each of the transactions, prepare journal entries to record them in appropriate governmental funds (which are accounted for on a modified accrual basis).

2. Prepare journal entries to reflect how the transactions would be reflected in government-wide statements (which are prepared on a full accrual basis).

3. How can governments justify preparing two sets of financial statements, each on a different basis?