1/ Lucia Ltd. reported net income of $137,000 for the year ended December 31, 2018. January 1 balances in accounts receivable and accounts payable were $28,900 and $27,900, respectively. Year-end balances in these accounts were $31,900 and $23,100, respectively. Assuming that all relevant information has been presented, Lucia's cash flows from operating activities would be:

Multiple Choice

• $144,800.

• $140,000.

• $129,200.

• $76,200.

2/ On December 15, 2018, Rigsby Sales Co. sold a tract of land that cost $3,300,000 for $5,000,000. Rigsby appropriately uses the installment sales method of accounting for this transaction. Terms called for a down payment of $490,000 with the balance in two equal annual installments payable on December 15, 2019, and December 15, 2020. Ignore interest charges. Rigsby has a December 31 year-end.

In 2018, Rigsby would recognize realized gross profit of:

Multiple Choice

• $1,700,000.

• $490,000.

• $ 0.

• $166,600.

3/ Lake Power Sports sells jet skis and other powered recreational equipment. Customers pay one-third of the sales price of a jet ski when they initially purchase the ski, and then pay another one-third each year for the next two years. Because Lake has little information about the ability to collect these receivables, it uses the installment sales method for revenue recognition. In 2017, Lake began operations and sold jet skis with a total price of $1,170,000 that cost Lake $585,000. Lake collected $390,000 in 2017, $390,000 in 2018, and $390,000 in 2019 associated with those sales. In 2018, Lake sold jet skis with a total price of $1,950,000 that cost Lake $1,170,000. Lake collected $650,000 in 2018, $500,000 in 2019, and $500,000 in 2020 associated with those sales. In 2020, Lake also repossessed $300,000 of jet skis that were sold in 2018. Those jet skis had a fair value of $112,500 at the time they were repossessed.

Total cash collections on installment sales during 2018 would be:

Multiple Choice

• $1,040,000.

• $940,000.

• $0.

• $390,000.

4/ Mary signed up and paid $1,500 for a 6 month ceramics course on June 1^st with Choplet Ceramics. As of August 1^st, Choplets accounting records would indicate:

Multiple Choice

• $500 of revenue, $1,000 of accounts receivable

• $500 of revenue, $1,000 of deferred revenue

• $1,500 of revenue, $1,500 of cash

• $1,000 of revenue, $500 of accounts receivable

5/ Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales are not reasonably assured, and bad debt losses cannot be reasonably predicted. It is unlikely that repossessed merchandise is in condition to be re-sold. Therefore, Reliable uses the cost recovery method. Merchandise costing $28,750 was sold for $58,000 in 2017. Collections on this sale were $21,700 in 2017, $14,100 in 2018, and $22,200 in 2019.

In 2017, Reliable would recognize gross profit of:

Multiple Choice

• $9,750.

• $ 0.

• $29,250.

• $ 8,608.