1. PLEASE ANSWER AT LEAST ONE OF THE FOLLOWING PROBLEMS

Installment sales.

Sawyer Furniture Company concluded its first year of operations in which it made sales of $800,000, all on installment. Collections during the year from down payments and installments totaled $300,000. Purchases for the year totaled $400,000; the cost of merchandise on hand at the end of the year was $80,000.

Instructions

Using the installment-sales method, make summary entries to record:

(a) the installment sales and cash collections;

(b) the cost of installment sales;

(c) the unrealized gross profit;

(d) the realized gross profit.

2. PLEASE ANSWER AT LEAST ONE OF THE FOLLOWING PROBLEMS

Percentage-of-completion method.

Penner Builders contracted to build a high-rise for $14,000,000. Construction began in 2010 and is expected to be completed in 2013. Data for 2010 and 2011 are:

2010 2011

Costs incurred to date $1,800,000 $5,200,000

Estimated costs to complete 7,200,000 4,800,000

Penner uses the percentage-of-completion method.

Instructions

(a) How much gross profit should be reported for 2010? Show your computation.

(b) How much gross profit should be reported for 2011?

(c) Make the journal entry to record the revenue and gross profit for 2011.