Steele Corporation Case 9.2-3

1. (TCO A) An alternative available when the seller is exposed to continued risks of ownership through return of the product is (Points : 6) Recording the sale, and accounting for returns as they occur in future periods. Not recording a sale until all return privileges have expired. Recording the sale, but reducing sales by an estimate of future returns. All of the above.

2. (TCO A) During 2010, Steele Corporation sold merchandise costing $1,500,000 on an installment basis for $2,000,000. The cash receipts related to these sales during 2010 were $800,000.What is the amount of deferred gross profit Steele Corporation will report on Dec 31, 2010?
(Points : 6) $700,000 $200,000
(TCO A) In accounting for a long-term construction-type contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross profit from the contract, multiplied by the percentage of the costs incurred during the year to the (Points : 6) Total costs incurred to date. Total estimated cost. Unbilled portion of the contract price Total contract price.

4. (TCO B) Larsen Corporation reported $100,000 in revenues in its 2010 financial statements, of which $44,000 will not be included in the tax return until 2011. The enacted tax rate is 40% for 2010 and 35% for 2011. What amount should Larsen report for deferred income tax liability in its balance sheet at December 31, 2010? (Points : 6) $15,400 $17,600 $19,600 $22,400

5. (TCO B) Tax rates other than the current tax rate may be used to calculate the deferred income tax amount on the balance sheet if (Points : 6) it is probable that a future tax rate change will occur. it appears likely that a future tax rate will be greater than the current tax rate. the future tax rates have been enacted into
(TCO B) Markes Corporation's partial income statement after its first year of operations is as follows:Income before Income Taxes $3,750,000
Income Tax expense Current $1,035,000 Deferred 120,000 __________ 1,155,000 __________
Net Income $2,595,000
Markes uses the straight-line method of depreciation for financial reporting purposes and accelerated depreciation for tax purposes. The amount charged to depreciation expense on its books this year was $1,500,000. No other differences existed between book income and taxable income except for the amount of depreciation.
Assuming a 30% tax rate, what amount was deducted for depreciation on the corporation's tax return for the current year?
(Points : 6) $1,200,000 $1,425,000 $1,900,000 $1,800,000

22. Paragan Construction Company uses the percentage-of-completion method of accounting. In 2011, Paragan began work on a contract it had received which provided for a contract price of $19,000,000. Other details for the year 2011