3.

Maryland Quality Homes (MQH) constructed a new subdivision during 2015 and 2016 under contract with Mason-Dixon Co. Relevant data are summarized below:

Contract amount		$3,000,000
Cost:	2015	1,200,000
	2016	600,000
Gross profit:	2015	800,000
	2016	400,000
Contract billings:	2015	1,500,000
	2016	1,500,000

3a. MQH recognizes revenue over time with respect to these contracts. What would be the journal entry made in 2015 to record revenue (and show computations)?

3b. MQH recognizes revenue over time with respect to these contracts. For 2016, what is the journal entry to record revenue (and show computations)?

3c. MQH recognizes revenue upon completion of the contract.

For 2015, what is the journal entry to record revenue (and show computations)?

4. Prepare a cash flow statement for the following information.

Balance Sheet ($)

Jan 1 Dec 31

ASSETS:

Current Assets:

Cash 310,000 600,000

Marketable Securities 1,200,000 1,000,000

Accounts Receivable, net 290,000 330,000

Inventory 3,000,000 4,000,000

Prepaid Expenses 200,000 300,000

Total Current Assets 5,000,000 6,230,000

Total Fixed Assets, net 2,500,000 2,000,000

Total Assets 7,500,000 8,230,000

LIABILITIES & EQUITIES

Current Liabilities:

Accounts Payable 1,500,000 1,000,000

Notes Payable 1,000,000 1,000,000

Accrued Expenses 500,000 800,000

Total Current Liabilities 3,000,000 2,800,000

Total Long-term Liabilities 1,000,000 1,500,000

Total Liabilities 4,000,000 4,300,000

Preferred Stock 500,000 500,000

Common Stock 500,000 500,000

Capital in Excess of Par 1,000,000 1,000,000

Retained Earnings 1,500,000 1,930,000

Total Stockholders Equity 3,500,000 3,930,000

Total Liabilities and Equity 7,500,000 8,230,000

Income Statement (for problem 4)

Sales 10,000,000

COGS 6,000,000

Gross Profit 4,000,000

Administrative expenses 1,200,000

Depreciation 500,000

EBIT 2,300,000

Interest Expense 500,000

EBT 1,800,000

Taxes (40%) 720,000

Net Income 1,080,000

5. An analyst compiled the following information for Uver Inc. for the year ended December 31, 2016: Net income was $1,700,000. Depreciation expense was $400,000. Interest paid was $200,000. Income taxes paid were $100,000. Common stock was sold for $200,000. Preferred stock (8% annual dividend) was sold at par value of $250,000. Common stock dividends of $50,000 were paid. Preferred stock dividends of $20,000 were paid. Equipment with a book value of $100,000 was sold for $200,000. Using the indirect method, what was Uver Inc.'s net cash flow from operating activities for the year ended December 31, 2016?