Question 1 Problem P7-6 Question 2 Free Form Builders Inc., a construction company, recognizes revenue from its long-term contracts using the percentage of completion method. On March 29, 2005, the company signed a contract to construct a building for $500,000. The company estimated that it would take four years to complete the contract and estimated the cost to the company at $325,000. The expected costs in each of the four years are as follows: Year Cost 2005 $110,750 2006 $100,500 2007 $ 84,250 2008 $ 29,500 Total $325,000
On December 31, 2006, the date Free Form closes its books, the company revised its estimates for the costs in 2007 and 2008. It estimated that it would cost $200,000 in 2007 and $100,000 in 2008 to complete the contract. [For clarification, the books for 2006 have not been closed yet.] Required: Compute the revenue, expense, and profit/loss for each of the four years. Question 3 The following information relates to the held-for-trading investments (“HFTI”) of Anders Corp. Acquisition Date Apr. 13/2005 Aug. 24/2005 Jan. 8/2006 Jan. 3/2007 Acquisition Cost $ 70,000 45,000 35,000 95,000 Date Sold NA May 27/2006 NA June 30/2007 Selling Price NA 52,000 NA 98,000 Market Value Dec. 31 2005 2006 2007 $68,000 48,000 NA NA $72,000 NA 38,000 NA $69,000 NA 41,000 NA
Security Alpha Beta Delta Omega
The Anders Corp. closes its books on December 31 each year. [“NA” means not applicable.] Required: a. Prepare journal entries relating to these held-for-trading investments for each year. b. Show how the information regarding held-for-trading investments would be presented on the income statement and balance sheet for each year.
THE TEMPLATE FOR SUBMITTING YOUR ASSIGNMENT (including the other questions from your textbook) STARTS ON THE NEXT PAGE. ONLY HAND-IN THE PAGES STARTING WITH “NAME”.
Busi 293−ASSIGNMENT #3
P7–6 Req. 1
October 13, 2009 NAME (Last,First): ______________STUDENT NO:...