1.On June 1, 2018, Johnson & Sons sold equipment to James Landscaping Service in exchange for a zero-interest bearing note with a face value of 110,000, with payment due in 12 months. The fair value of the equipment on the date of sale was 100,000. The amount of revenue to be recognized on this transaction in 2018 is

a.110,000.

b.10,000

c.100,000

d.100,000 sales revenue and $5,833 interest revenue.

1.The percentage-of-completion method

a.recognizes revenue and gross profit each period based upon progress.

b.is used primarily for short-term contracts.

c.accumulates construction costs in the Billings on Construction in Progress account.

d.recognizes revenue and gross profits only when contract is completed.

2.How should the balances of Progress Billings and Construction in Process be shown at reporting dates prior to the completion of a long-term contract?

a.Progress Billings as deferred income, Construction in Progress as a deferred expense.

b.Progress Billings as income, Construction in Process as inventory.

c.Net balance, as a current asset if debit balance, and current liability if credit balance.

d.Net balance, as income from construction if credit balance, and loss from construction if debit balance.

3.In accounting for a long-term construction-type contract using the percentage-of-completion method, the gross profit recognized during the first year would be the estimated total gross profit from the contract, multiplied by the percentage of the costs incurred during the year to the

a.total costs incurred to date.

b.total estimated cost.

c.unbilled portion of the contract price.

d.total contract price.

4.Under the cost-recovery method

a.revenue, cost, and gross profit are recognized during the production cycle.

b.revenue and cost are recognized during the production cycle, but gross profit recognition is deferred until the contract is completed.

c.revenue, cost, and gross profit are recognized at the time the contract is completed.??

d.None of these answers are correct.