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```							1. An analysis and aging of accounts receivable of the Lucille co. at 12/31/07, showed the
following:
Accounts receivable                840.000
Allowance for doubtful accounts 36,000(cr)
Accounts estimated to be uncollectible 76,800
Compute the net realizable value of the accounts receivable of Lucille co at 12/31/07

2. A new product introduced by wilkenson promotions carries a 2yr warranty against defects. The
estimated warranty costs related to dollar sales are as follows.
Year of sale 3%
Year after sale 5%
Sales and actual warranty expenditures for the years ended 12/31/07 & 2008 are as follows:
Sales             actual warranty expenditures
2007-800,000          20,000.
2008-1,000,000         70,000
What amount should wilkenson report as its estimated liability as of 12/31/08?

3. How should the balances of progress billings and construction in progress be shown at reporting
dates prior to the completion of a long term contract?
a. Progress billings as income construction in progress as inventory.
b. Net, as income from construction if credit balance, & loss from construction if debit balance
c. Progress billings as deferred income, construction in progress as a current asset.
d. Net, as a current asset if debit balance,& current liability if credit balance.
e.
4. Brown const. co. uses the percentage of completion method for long term construction
contracts. A specific job was begun in 2007 & completed in 2009. The contract price was
1,400,000 and cost information as of each year end is given below.

End of year cost complete        2007      2008          2009
400,000     200,000       0
Annual cost incurred           400,000 400,000           120,000
Assuming brown correctly recorded gross profit in 2007, how much gross profit should the
company record in 2008?

5. On july 1,2007 abc corp, sold 20,000 in factored receivables for 18,350 assume the allowance of
bad debts to be 500. What is the loss from factoring?

6. Based on the aging of its accounts receivable at 12/31, pribob co. determined that the net
realizable value of the receivables as that date is 760,000
Accounts receivable 12/31                          880.000
Allowance doubtful accounts 1/1                    128,000(cr)
Accounts written off uncollectible during the year 88,000
Pribob’s doubtful accounts expense for the year ended 12/31 is ?

7. Company began operations on 1/1/07 & appropriately uses the installment method of
accounting. The following data available for 2007 & 2008
2007                     2008
Installment sales     1,200,000                1,500,000
Cash collections from:
2007 sales             400,000                  500,000
2008 sales               -                      600,000
Gross profit on sales     30%                    40%
The realized gross profit for 2008 is?

8. Co. accepted 400,000 face value 6mth, 10% noted dated 5/15 from a customer. On the same
date, grant discounted the note at eagle national bank at 12% discount rate. How much cash
should grant receive from the bank on 5/15?

9. Lake const co. uses the completed contract method for long term construction contracts. The
information for a specific contract as of 1/1/07 is shown below.
Costs incurred to date                700,000
Contract price                         2,000,000
Estimated remaining cost to complete 800,000
600,000 of cost was incurred during 2007 & on 12/31/07, the estimated remaining cost to
Complete was still 800,000. The correct balance for the construction in progress at 12/31/07 is?

10. in preparing the bank reconciliation of co for the month of july, the following is
balance per bank statement 7/31                          54,075
deposit in transit, 7/31                                  9,375
outstanding checks 7/31                                   8,625
deposit erroneously recorded by bank to co account,7/18 375.00
bank service charges for july                                75.00
what is the correct cash balance at 7/31?

11. Construction has consistently used the percentage of completion method of recongnizing
income. Last year they started work on a 4,500,000 construction contract. Which was completed
last year. The accounting records disclosed the following data for last year.
Progress billings           1,650,000
Costs incurred              1,350,000
Collections                 1,050,000
Estimated cost to complete 2,700,000
How much income should they have recognized on this contract last year?
12. Under which approach does a co. record all earnings from a project to the current period even
though only a percentage of these earnings were actually realized during this period?
a. Proportional performance method
b. Cost-to-cost method
c. Efforts expended method
d. Completed contract method
13. On 6/30/07. Simon co. discounted a customer 180,000 6-month 10% note receivable dated
4/30/07. A discount rate of 12% was charged by the bank. simon proceeds from this discounted
note would be?
14. The co. uses the percentage-of –completion method for long term construction contracts. The
co. has a project with a contract price of 7,000 on which 600 of gross profit has been recognized
in prior years, information for the current year as follows:
Total cost incurred through current year           5,000
Estimated costs remaining at end of current year 2,800
What is the loss that the co. should recognize in the current year?

15. 9/1 riva co. assigns specific receivables totaling 750,000 to the bank as collateral on a 625,000
12% note. Riva will continue to collect the assigned accounts receivable. The bank assesses a 2%
service charge on the total accounts receivable assigned. Riva is to make monthly payments to
the bank with cash collected on assigned accounts receivable. Collections of assigned account
during September totaled 260,00 less cash discounts of 3,500 what amount owed to the bank by
riva co, for September collections plus accrued interest on the note to 9/30?

16. Richards co uses the allowance method of accounting for bad debts. The following summary
schedule was prepared from an aging of accounts receivable outstanding on 12/31 of the
current year.
No. of days outstanding                 amount         probability of collection
0-30 days                             500,000               .98
31-60 days                            200,000                .90
Over 60 days                         100,000                 .80
The following additional information is available for the current year:
Net credit sales for the year                    4,000,000
Allowance doubtful accounts                      45,000(cr)
If Richards determines bad debt expenses using 1.5% of the net credit sales, the net realizable
value of accounts receivable on 12/31 balance sheet will be?

17. Assume a retail co. makes a 5,000 deposit of credit card receipts for sales made on visa &
mastercard and the bank charges 4% service charge for sales on these cards. The company
would debit cash for?
18. Jane likes to shop at the gap upon occasion. Last week she bought a sweater because it was just
the right color to match another item in her wardrobe. Once she got the sweater home, it didn’t
match at all. So jane revisited the gap and returned the sweater, which of the following indicates
the accounts that would be affected by jane’s return.
a. Sales return and allowances and cost of goods sold
b. Accounts receivable
c. Inventory and sales return
d. Sales return and allowances, cost of goods sold, inventory,and account receivables

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