In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate recognizes revenue over time according to percentage of completion.

Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
2-a. In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred).
2-b. In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred).
2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred).
3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract.
4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

The 160th Ohio State Fair in 2013 had an estimated 903,824 visitors during the twelve days of the fair, which was record-breaking attendance. The high attendance led to a record-breaking profit of about $400,000 for the fair. Among the sources of revenue for The Ohio State Fair are the revenues generated from the food vendors. A number of food vendors offer a wide variety of fair foods to attendees, including funnel cakes, gyros, cotton candy, milkshakes, and corn dogs. The Ohio State Fair fee schedule for food vendors for 2014 is as follows: $10 per linear foot for ground service fees (front footage x depth) 10% of concessions (food sales) $40 per 12-day parking permit $290 for 100-amp electrical service $50 per 12-day fair admittance pass (one included with basic rental agreement) Questions Of the fees listed in the schedule, which fees are variable with respect to the number of customers at the booth? Which fees are fixed? Assume that Star Concessions has a food booth that requires 15’ of frontage and is 12’ deep. Star expects to have sales averaging $3,600 per day for each of the 12 days of the fair. It has a total of four employees who will work the fair throughout the entire 12-day period. Star pays for each employee’s fair admission and parking. What is the projected total fee that Star will need to pay to The Ohio State Fair? Assume that variable costs are 40% of sales revenue. This 40% includes the 10% charged by The Ohio State Fair. What total sales revenue is needed for Star Concessions to breakeven? What is the average daily sales revenue needed to breakeven? Using your answers from #2 and #3 above, calculate Star’s margin of safety in dollars and percentage.

Required information

[The following information applies to the questions displayed below.]

Adger Corporation is a service company that measures its output based on the number of customers served. The company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for May as shown below:

When preparing its planning budget the company estimated that it would serve 35 customers per month; however, during May the company actually served 40 customers.

1. What is Adger’s revenue variance, employee salaries and wages spending variance, travel expenses spending variance, and other expenses spending variance for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

2. What amount of revenue, employee salaries and wages, travel expenses, and other expenses would be included in Adger’s planning budget for May?

3. What activity variance would Adger report in May with respect to its revenue? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

4. What activity variances would Adger report with respect to each of its expenses for May? (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

5. What net operating income would appear in Adger’s flexible budget for May?

Lavage Rapide is a Canadian company that owns and operates a large automatic carwash facility near Montreal. The following table provides data concerning the company’s costs:

For example, electricity costs are $1,100 per month plus $0.05 per car washed. The company expects to wash 8,000 cars in August and to collect an average of $6.30 per car washed.

The actual operating results for August appear below.

Required:

Complete the flexible budget performance report that shows the company’s activity variances and revenue and spending variances for August. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Requirements:

1. Journalize and Post the adjusting entries using the T-accounts

2. Prepare an adjusted trial balance as of December 31, 2018

November 3: Purchased Canoes for $4,800 on account.

December 2: Purchased Canoes signing a notes payable for $7,200.

At December 31, the business gathers the following information for the adjusting entries:

a. Office supplies on hand, $165

b. Rent of one month has been used (1000.00).

c. Determine the depreciation on the building using straight-line depreciation. Assume the useful life of the building is five years and the residual value is $5,000.

d. $400 of unearned revenue has now been earned.

e. The employee who has been working the rental booth has earned $1,250 in wages that will be paid January 15, 2013.

f. Canyon Canoes has earned $1,850 of canoe rental revenue that has not been recorded or received.

g. Determine the depreciation on the canoes purchased on November 3 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is $0.

h. Determine the depreciation on the canoes purchased on December 2 using straight-line depreciation. Assume the useful life of the canoes is 4 years and the residual value is $0.

i.   Interest expense accrued on the notes payable, $50.

Unadjusted Trial Balance

Problem 8-19A More Than One Cost Driver [LO8-2, LO8-3] Milano Pizza is a small neighborhood pizzeria that has a small area for in-store dining as well as offering take-out and free home delivery services. The pizzeria’s owner has determined that the shop has two major cost drivers—the number of pizzas sold and the number of deliveries made. Data concerning the pizzeria’s costs appear below:

In November, the pizzeria budgeted for 1,560 pizzas at an average selling price of $15 per pizza and for 220 deliveries.

Data concerning the pizzeria’s operations in November appear below:

Required: 1. Compute the revenue and spending variances for the pizzeria for November. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values.)

Beth is a second-grader who sells lemonade on a street corner in your neighborhood. Each cup of lemonade costs Beth $0.20 to produce; she has no fixed costs. The reservation prices for the 10 people who walk by Beth's lemonade stand each day are listed in the following table.

Beth knows the distribution of reservation prices (that is, she knows that one person is willing to pay $0.50, another $0.45, and so on), but she does not know any specific individual’s reservation price.

a. Calculate the marginal revenue of selling an additional cup of lemonade. (Start by figuring out the price Beth would charge if she produced only one cup of lemonade, and calculate the total revenue; then find the price Beth would charge if she sold two cups of lemonade; and so on.)

b. What is Beth’s profit-maximizing price?

Instruction: Enter your response rounded to two decimal places.

$ .

c. At that price, what are Beth’s economic profit and total consumer surplus?

Instruction: Enter your responses rounded to two decimal places.

Economic profit: $ per day.

Consumer surplus: $ per day.

d. What price should Beth charge if she wants to maximize total economic surplus?

Instruction: Enter your response rounded to two decimal places.

Price to maximize total economic surplus: $ .

Exercise 5-20 Long-term contract; revenue recognition upon project completion; loss projected on entire project [LO5-8, 5-9] On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,025,000. During 2018, costs of $2,010,000 were incurred, with estimated costs of $4,010,000 yet to be incurred. Billings of $2,512,000 were sent, and cash collected was $2,260,000.

In 2019, costs incurred were $2,512,000 with remaining costs estimated to be $3,615,000. 2019 billings were $2,762,000, and $2,485,000 cash was collected. The project was completed in 2020 after additional costs of $3,810,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.

Required: 1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years.

2b. Prepare journal entries for 2019 to record the transactions described (credit "various accounts" for construction costs incurred).

3a. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018.

3b. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2019.

Calculate the times interest earned ratio from 2015 to 2018 and interpret them.