1. The following information is for Redwood Inc.for the year ended December 31, 2016. Redwood had a cash and cash equivalentsbalance of $5,200 on January 1, 2016.

Cash received from:
Customers	$1,900
Interest on investments	200
Sale of land	100
Sale of common stock	600
Issuance of debt securities	2,000
Cash paid for:
Interest on debt	$300
Income tax	80
Debt principal reduction	1,500
Purchase of equipment	4,100
Purchase of inventory	1,000
Dividends on common stock	200
Operating expenses	500

Required: Prepare a statement of cash flows for the year using thedirect method for operating activities.

2 Beavy Construction Company was the low bidderon a construction project to build an earthen dam for $1,800,000. The projectwas begun in 2015 and completed in 2016. Cost and other data are presentedbelow:

2015 2016

Costsincurred during the year $450,000 $1,100,000

Estimatedcosts to complete 1,050,000 0

Billingsduring the year 400,000 1,400,000

Cashcollections during the year 300,000 1,500,000

Required:

Assumethat Beavy recognizes revenue on this contract over time according topercentage of completion.

a.Compute the amount of gross profit recognized during 2015 and 2016.

b.Prepare all journal entries to record costs, billings, collections, and profitrecognition.

Assumethat Beavy recognizes revenue upon completion of the project.

c. Compute the amountof gross profit recognized during 2015 and 2016.

d. Prepare alljournal entries to record costs, billings, collections, and profit recognition.