IMA - DOC

							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)
    Balance before adjustments 12/31                    2,000(dr)
    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