2. During 2011, Jasim Company changed from FIFO to weighted average inventory pricing. Pre-tax income in 2010 and 2009 (Jasim's first year of operation) under FIFO was $160,000 and $180,000 respectively. Pre-tax income using weighted average pricing in the prior would have been, $145,000 in 2010 and $170,000 in 2009. In 2011, Jasim Company reported pre-tax income (using Weighted average Pricing) of $190,000. Show comparative income statement for Jasim company beginning with "income before income tax", as presented on the income statement. (The tax rate in all years is 30%). 4. During 2010 Majan Company started a construction job with a contract price of $1,600,000. The job was completed in 2012. The following information is available. 2010 2011 2012 Cost incurred to date $400,000 $825,000 $1,070,000 Estimated costs to 600,000 275,000 0 complete Billings to date 300,000 900,000 1,600,000 Collections to date 270,000 810,000 1,425,000 Instructions: Compute the amount of gross profit to be recognized each year assuming the percentage-of- completion method is used. 5. Ahmed SA reports the following financial information before adjustments. Dr. Cr. Accounts Receivable 100,000 Allowance for Doubtful Accounts 2,000 Sales Revenue (all on credit) 900,000 Sales Returns and Allowances 50,000 Instructions: Prepare the journal entry to record Bad Debt Expense assuming Ahmed estimates bad debts at (a) 1% of net sales and (b) 5% of accounts receivable. 7. Fahim Furniture started construction of a combination office and warehouse building for its own use at an estimated cost of 5,000,000 on January 1, 2019. Fahim expected to complete the building by December 31, 2019. Fahim has the following debt obligations outstanding during the construction period. Construction loan-12% interest, payable semiannually, issued December 2,000,000 31, 2018 Short-term loan10% interest, payable monthly, and principal payable at 1,600,000 maturity on May 30, 2020 Long-term loan-11% interest, payable on January 1 of each year. Principal 1,000,000 payable on January 1, 2023 Instructions: Assume that Fahim completed the office and warehouse building on December 31, 2019, as planned at a total cost of 5,200,000, and the weighted-average accumulated expenditures was 3,800,000. Compute the avoidable interest on this project. 9. Sultan plc sells 10% bonds having a maturity value of $3,000,000 for $2,783,724. The bonds are dated January 1, 2019, and mature January 1, 2024. Interest is payable annually on January 1. The market rate of interest is 12%. Instructions: Prepare Sultan plc's journal entries for (a) The Jan. 1 issuance (b) The Dec. 31 interest. (c) Set up a schedule of interest expense and discount amortization
