The Ugenti Construction Company contracted to construct a warehouse building for $2,600,000. Construction began in 2016 and was completed in 2017. Data relating to the contract are summarized below:

                                                                                   2016                  2017

      Costs incurred during the year.................      $   360,000         $1,650,000

      Estimated costs to complete as of 12/31.        1,560,000                   -      

      Billings during the year ..........................           430,000         2,170,000

      Cash collections during the year..............           320,000         2,280,000

Required:

1.   Compute the amount of gross profit or loss to be recognized in 2016 and 2017 using the percentage-of-completion method (over time method).

2.   Compute the amount of gross profit or loss to be recognized in 2016 and 2017 using the completed contract method (at point in time).

Using Excel, complete this construction handout using the either the format in the textbook or the format in the ABC Construction Contract Worksheet Example posted in Bb. Include all necessary journal entries to record the cost of construction, progress billings, entry to recognize revenue and gross profit and entry to record final approval of the contract.

Accounting Changes-Depreciation
Described below are two independent and unrelated situations involving accounting
changes. Each change occurs during 2016 before any adjusting entries or closing entries
were prepared.
a. On December 30, 2012, Rival Industries acquired its office building at a cost of
$1,000,000. It was depreciated on a straight-line basis assuming a useful life of 40
years and no salvage value. However, plans were finalized in 2016 to relocate the
company headquarters at the end of 2020. The vacated office building will have a
salvage value at that time of $700,000.
b. At the beginning of 2013, the Hoffman Group purchased office equipment at a cost of
$330,000. Its useful life was estimated to be 10 years with no salvage value. The
equipment was depreciated by the sum-of-the years’-digits method. On January 1,
2016, the company changed to the straight-line method.
Instructions:
a. Briefly describe the way company should report this accounting change in the
financial statements.
b. Prepare any 2016 journal entry related to the change.

A leading German tour operator sells package tours to Sri Lanka for British and German tourists. On January 1, 2016, tour operator sent its printed catalog to British and German travel agencies quoring price of £7,500 and 10,000EUR, respectively, valid throughout 2016 on their fortnight package tours to Sri Lanka. The cost incurred by tour operator, on a unit basis, is distributed as follows: 5,200EUR for administrative and travel costs and 13,00SRL (Sri Lankan rupees) for residential costs. The exchange rate is SRL 10 per EUR 1.

On August 15, 2016, the Euro is revalued by 15 percent vis-a-vis the British pound due to Brexit. However, because of earlier booking, the euro revaluation cannot be passed through before January 1, 2017.

Assuming that tour operator sells 500 trips every 15 days evenly divided between British and German, assess the impact of the Euro revaluation upon the profitability of tour operator in 2016.

The following information relates to the Jimmy Johnson Company.

                                    Ending Inventory                    Ending Inventory

Date     At Base-Year Cost At Current Year Cost Price Index

___________________________________________________________________________________________

12/31/15 (base)                 $68,400                                  $68,400                                    1.00

12/31/16                            $91,600                                 $122,744                                   1.34

12/31/17                            $89,800                                 $132,904                                   1.48

Using dollar-value LIFO, 2016 ending inventory is?

Using dollar-value LIFO, 2017 ending inventory is?

What is the change in inventory in base-year prices in 2016 (i.e., comparing 2016 ending inventory to 2015 ending inventory, what is the change in base-year, not current year, prices)?

What is the change in inventory in base-year prices in 2017 (i.e., comparing 2017 ending inventory to 2016 ending inventory, what is the change in base-year, not current year, prices)?

Including the base-year of $68,400, how many layers are there at the end of 2017? (Hint: Any negative changes in inventory should be a correction to a previous layer, not a new layer.)?

The following information was extracted from Mathis Corporation's 2016 annual report:

Common stock
Shares outstanding 12/31/15 90 million
New shares issued 04/01/16 10 million
Shares outstanding 12/31/16 100 million

Preferred stock
$10 par, 10%, convertible into 2 shares of common stock, shares outstanding 50 million

Options
1 million options, each to purchase one common share at $50 per share

Market price of stock
Average for year $75
Beginning of year $70
End of year $78

Preferred dividends paid $50,000,000
Net income for 2016 $350,000,000

Required:
A. Calculate basic earnings per share for 2016? (5 points)
B. What is diluted earnings per share for 2016? (5 points)
C. What does EPS mean? (3 points)
C. What does "antidilutive securities" mean? (3 points)

Please show calculations.

2. (20 pts) Wellcraft Company purchased a machine on January 1, 2015 for $625,000. The machine has a four year useful life and a salvage value of $25,000. The machine was depreciated using sum of the years digits. On January 1, 2017, two years later, it was determined they should have used straight line depreciation and decided to change to straight line. The useful life was also extended by two years, and the salvage value was reduced to $15,000. Profit for 2015 was $800,000 and for 2016 was $900,000 using sum of the years’ digits depreciation. Prior to depreciation expense in 2017, profits were $200,000.

A. Determine the correct profits for 2015, 2016, 2017

B. Assume Wellcraft used the completed contract method for 2016 but switched to percent of completion in 2017.

                                                                        2016                              2017

Profits under completed contract          $400,000                       $450,000
Profits under percent of completion      $650,000                       $580,000

C. Sean Kowalski, CEO, is paid a bonus of 1% of profits each year. Determine his bonus paid to him in 2017.

Managers at marc Corp. are concerned that the company’s costs of production have gone wild. The chief financial officer brings you the following historic data:

marc corp selling price is $80 per unit

Use Excel. Using the High-low method:

Estimate the company’s cost formula.

Estimate the total cost of producing 1,200 units.

Calculate the breakeven point in dollar sales.

Prepare the contribution format income statement when 1,200 units are sold.

Compute the degree of operating leverage when 1,200 units are sold. Compute Net operating income if sales increased 120 units above this level.

Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $402,000 2016 460,000 2017 539,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $167,000. The equipment is expected to last three years and have a(n) $14,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $96,000 in 2015, $38,000 in 2016, and $19,000 in 2017. Wyhowski's tax rate is 35%. Required: Enter all amounts as positive numbers. 1. How much did Wyhowski pay in income tax each year? If required, round all calculations to the nearest dollar. Year Taxes Paid 2015 $ 15,750 2016 $ 2017 $ 2. How much income tax expense did Wyhowski record each year? Year Income Tax Expense 2015 $ 2016 $ 2017 $

On May 8, 2015, Jett Company (a U.S. company) made a credit sale to Lopez (a Mexican company). The terms of the sale required Lopez to pay 1,340,000 pesos on February 10, 2016. Jett prepares quarterly financial statements on March 31, June 30, September 30, and December 31. The exchange rates for pesos during the time the receivable is outstanding follow.

Compute the foreign exchange gain or loss that Jett should report on each of its quarterly statements for the last three quarters of 2015 and the first quarter of 2016

Compute the amount reported on Jett's balance sheets at the end of its last three quarters