On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $410 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):

Required:
1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion.
2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time.
3. Suppose the estimated costs to complete at the end of 2019 are $200 million instead of $50 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method.

On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $310 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):

Required:
1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion.
2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time.
3. Suppose the estimated costs to complete at the end of 2019 are $120 million instead of $30 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method.

The March 31, 2019 balance sheet of Kalakaua Corporation had Accounts Receivable of $525,000 and a credit balance in Allowance for Doubtful Accounts of $33,000. During the year ended March 31, 2020, the following transactions occurred: sales on account $1,550,000; sales returns & allowances, $120,000; collections from customers, $1,350,000; accounts written off $41,000; previously written off accounts of $5,000 were collected.

REQUIRED:

1.Using the above information, what is the balance of Accounts Receivable at March 31, 2020?

2.Suppose that it is the company policy to use the percentage of sales basis to estimate bad debts expense and anticipates 3% of net sales to be uncollectible, what is the adjusting entry at March 31, 2020? (Show calculations.)

3.Ignore the entry made in b) above.

Assume that it is company policy to use the aging of receivables basis to estimate bad debt expense. It determines that uncollectible accounts are expected to be $38,400. What is the adjusting entry at March 31, 2020? Assume the March 31, 2020 balance of Accounts Receivable is $575,000 and Allowance for Doubtful Accounts has an existing balance of $3,000 (cr). (Show calculations)

Pronghorn Inc. and Culver Corporation are Canadian fertilizer companies. The following information has been taken from their financial statements for the fiscal years ended December 31. All figures are in millions of dollars.

1) Calculate both companies’ gross profit margin and profit margin for the years 2019 through 2021. (Round answers to 1 decimal place, e.g.52.7%.)

2)

Determine which company had the best performance for profitability in each year.

3) Using horizontal analysis, calculate the percentage change between the following years: 2019 and 2020; 2020 and 2021 for both companies. (Round answers to 1 decimal place, e.g.52.7%.)

4) Using the information in the horizontal analysis, identify the company that had the most improvement in net sales, gross profit margin and profit margin in 2020 and 2021.

Exercise 21-12 (Part Level Submission)

On January 1, 2020, Pharoah Company leased equipment to Flynn Corporation. The following information pertains to this lease.

1.The term of the non-cancelable lease is 6 years. At the end of the lease term, Flynn has the option to purchase the equipment for $1,000, while the expected residual value at the end of the lease is $9,000.

2.Equal rental payments are due on January 1 of each year, beginning in 2020.

3.The fair value of the equipment on January 1, 2020, is $120,000, and its cost is $110,000.

4.The equipment has an economic life of 8 years. Flynn depreciates all of its equipment on a straight-line basis.

5.Pharoah set the annual rental to ensure a 6% rate of return. Flynn's incremental borrowing rate is 8%, and the implicit rate of the lessor is unknown.

6.Collectibility of lease payments by the lessor is probable.

Both the lessor and the lessee's accounting periods end on December 31.

a. What is the amount of the annual Rental Payment?

d.   Suppose the collectibility of the lease payments was not probable for Pharoah. What are the necessary journal entries for the company in 2020.

c.   What are the journal entries for Flynn for 2020.

On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $400 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions):

Required:
1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion.
2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time.
3. Suppose the estimated costs to complete at the end of 2019 are $150 million instead of $50 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method.

Savings-Mart (a chain of discount department stores) sells patio and lawn furniture. Sales are seasonal, with higher sales during the spring and summer quarters and lower sales during the fall and winter quarters. The company developed the following quarterly sales forecasting model:

Yˆt=7.50+1.100t−2.75D1t+0.25D2t+3.5D3t

where

Forecast Savings-Mart's sales of patio and lawn furniture for each quarter of 2020.

Selected ledger account balances for Business Solutions follow.

Required:
1. Assume that Business Solutions does not acquire additional office equipment or computer equipment in 2020. Compute amounts for the year ended December 31, 2020, for Depreciation expense—Office equipment and for Depreciation expense—Computer equipment (assume use of the straight-line method).
2. Given the assumptions in part 1, what is the book value of both the office equipment and the computer equipment as of December 31, 2020?
3. Compute the three-month total asset turnover for Business Solutions as of March 31, 2020.

Required 1: Depreciation Expense for:

Office Equipment-

Computer Equipment-

Required 2: Book value for:

Office equipment-

computer equipment-

Required 3:

Total asset turnover-

In this assignment, assume that the Sec. 179 and bonus depreciation tax apply to the 2020 tax year where applicable.

1. For a-d, determine the total depreciation amount for 2020 assuming the taxpayer opted out of Sec. 179 and bonus if they were available in the year of purchase. In addition, assume all taxpayers use a calendar year tax period and that the property mentioned was the only property purchased in the year of acquisition.
   
   

The following facts pertain to a non-cancelable lease agreement between Metlock Leasing Company and Ivanhoe Company, a lessee.

The collectibility of the lease payments by Metlock is probable.

1.Compute the amount of the lease receivable at commencement of the lease.

2.Prepare a lease amortization schedule for Metlock for the 5-year lease term.

3.Prepare the journal entries to reflect the signing of the lease agreement and to record the receipts and income related to this lease for the years 2020 and 2021. The lessor’s accounting period ends on December 31. Reversing entries are not used by Metlock.

4.Suppose the collectibility of the lease payments was not probable for Metlock. Prepare all necessary journal entries for the company in 2020