Furtastic manufactures imitation fur garments. On June 1, 2018, Furtastic made a sale to Willett's Department Store under terms that require Willett to pay $215,000 to Furtastic on June 30, 2018. In a separate transaction on June 15, 2018, Furtastic purchased brand advertising services from Willett for $25,000. The fair value of those advertising services is $11,500. Furtastic expects that 2% of all sales will prove uncollectible. Required: 1. to 3. Prepare the journal entries to record the transactions above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Date General Journal Debit Credit No Accounts receivable June 01, 2018 215,000 1 Sales revenue 215,000 Advertising expense 2 June 15, 2018 11,500 Service revenue 13,500 Cash 25,000 June 30, 2018 3 Cash 150,000 Accounts receivable 150,000 Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,100,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below 2018 2019 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 308,000 1,232,000 390,000 254,000 $1,615,000 0 1,640,000 1,760,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion Balance Sheet (Partial) At December 31, 2018 Current assets: Costs and profit in excess of billings 136,000 30,000x Accounts receivable On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $260 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): 2018 $60 140 2019 2020 $80 $65 60 Costs incurred during the year Estimated costs to complete as of December 31 Required: 1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. 2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time. 3. Suppose the estimated costs to complete at the end of 2019 are $110 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Suppose the estimated costs to complete at the end of 2019 are $110 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. (Enter your answers in millions. Use percentages as calculated and rounded in the table below to arrive at your final answer.) Percentages of completion Choose % complete to Choose numerator denominator date Estimated total Actual costs to date costs $ 2019 220 63.64% 140 2019 Brady Construction Company contracted to build an apartment complex for a price of $6,300,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Estimated Costs to Complete (As of the End of the Year) Costs Incurred During Year 2018 Situation 2018 2019 2020 2019 2020 1,630 2,5201,290 1,630 1,290 2,920 1,630 2,520 2,640 1 3,810 1,290 3,810 2,920 3,810 2,540 4,410 4,410 2,540 5,855 2,870 2 4 630 3,130 1,260 3,130 2,210 3,130 3,100 940 630 630 Required: Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.) Gross Profit (Loss) Recognized Revenue Recognized Upon Completion Revenue Recognized Over Time 2018 2019 2020 2018 2019 2020 Situation $ 398,382 S 860,000 $ 203,934 0 0 1 257,684 2 257,684 (27,684) 230,000 0 0 460 257,684 (100,000) 3 (647,684) 0 (390,000) (100,000) 1,280,000 1,122,500 4 157,500 0 0 0 330 x 5 157,500 (157,500) 330,000 0 6 185,000 (145,000) (230,000) (185,000) (145,000) (230,000) st Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $54,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $18,000 or will be entitled to an additional $18,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $18,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $18,000. Required: 1. to 4. Prepare the journal entries related to the contract. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction General Journal Debit Credit Accounts receivable 54,000 1 1 Bonus receivable 1,350 Service revenue 55,350 2 2 Service revenue 3,600 3,600 Bonus receivable 3 54,000 Accounts receivable Bonus receivable 450 Service revenue 54,450 18,000 4 Cash 4 Bonus receivable 3,600 Service revenue 14,400 Furtastic manufactures imitation fur garments. On June 1, 2018, Furtastic made a sale to Willett's Department Store under terms that require Willett to pay $215,000 to Furtastic on June 30, 2018. In a separate transaction on June 15, 2018, Furtastic purchased brand advertising services from Willett for $25,000. The fair value of those advertising services is $11,500. Furtastic expects that 2% of all sales will prove uncollectible. Required: 1. to 3. Prepare the journal entries to record the transactions above. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) Date General Journal Debit Credit No Accounts receivable June 01, 2018 215,000 1 Sales revenue 215,000 Advertising expense 2 June 15, 2018 11,500 Service revenue 13,500 Cash 25,000 June 30, 2018 3 Cash 150,000 Accounts receivable 150,000 Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,100,000. The project began in 2018 and was completed in 2019. Data relating to the contract are summarized below 2018 2019 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 308,000 1,232,000 390,000 254,000 $1,615,000 0 1,640,000 1,760,000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming Nortel recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2018 and 2019 assuming this project does not qualify for revenue recognition over time 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming this project does not qualify for revenue recognition over time. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Required 4 Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2018 assuming Nortel recognizes revenue over time according to percentage of completion Balance Sheet (Partial) At December 31, 2018 Current assets: Costs and profit in excess of billings 136,000 30,000x Accounts receivable On June 15, 2018, Sanderson Construction entered into a long-term construction contract to build a baseball stadium in Washington, D.C., for $260 million. The expected completion date is April 1, 2020, just in time for the 2020 baseball season. Costs incurred and estimated costs to complete at year-end for the life of the contract are as follows ($ in millions): 2018 $60 140 2019 2020 $80 $65 60 Costs incurred during the year Estimated costs to complete as of December 31 Required: 1. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming Sanderson recognizes revenue over time according to percentage of completion. 2. Compute the revenue and gross profit will Sanderson report in its 2018, 2019, and 2020 income statements related to this contract assuming this project does not qualify for revenue recognition over time. 3. Suppose the estimated costs to complete at the end of 2019 are $110 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Suppose the estimated costs to complete at the end of 2019 are $110 million instead of $60 million. Compute the amount of revenue and gross profit or loss to be recognized in 2019 using the percentage of completion method. (Enter your answers in millions. Use percentages as calculated and rounded in the table below to arrive at your final answer.) Percentages of completion Choose % complete to Choose numerator denominator date Estimated total Actual costs to date costs $ 2019 220 63.64% 140 2019 Brady Construction Company contracted to build an apartment complex for a price of $6,300,000. Construction began in 2018 and was completed in 2020. The following is a series of independent situations, numbered 1 through 6, involving differing costs for the project. All costs are stated in thousands of dollars. Estimated Costs to Complete (As of the End of the Year) Costs Incurred During Year 2018 Situation 2018 2019 2020 2019 2020 1,630 2,5201,290 1,630 1,290 2,920 1,630 2,520 2,640 1 3,810 1,290 3,810 2,920 3,810 2,540 4,410 4,410 2,540 5,855 2,870 2 4 630 3,130 1,260 3,130 2,210 3,130 3,100 940 630 630 Required: Complete the following table. (Do not round intermediate calculations. Enter answers in dollars. Round your final answers to the nearest whole dollar. Negative amounts should be indicated by a minus sign.) Gross Profit (Loss) Recognized Revenue Recognized Upon Completion Revenue Recognized Over Time 2018 2019 2020 2018 2019 2020 Situation $ 398,382 S 860,000 $ 203,934 0 0 1 257,684 2 257,684 (27,684) 230,000 0 0 460 257,684 (100,000) 3 (647,684) 0 (390,000) (100,000) 1,280,000 1,122,500 4 157,500 0 0 0 330 x 5 157,500 (157,500) 330,000 0 6 185,000 (145,000) (230,000) (185,000) (145,000) (230,000) st Velocity, a consulting firm, enters into a contract to help Burger Boy, a fast-food restaurant, design a marketing strategy to compete with Burger King. The contract spans eight months. Burger Boy promises to pay $54,000 at the end of each month. At the end of the contract, Velocity either will give Burger Boy a refund of $18,000 or will be entitled to an additional $18,000 bonus, depending on whether sales at Burger Boy at year-end have increased to a target level. At the inception of the contract, Velocity estimates an 80% chance that it will earn the $18,000 bonus and calculates the contract price based on the expected value of future payments to be received. At the start of the fifth month, circumstances change, and Velocity revises to 60% its estimate of the probability that it will earn the bonus. At the end of the contract, Velocity receives the additional consideration of $18,000. Required: 1. to 4. Prepare the journal entries related to the contract. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) No Transaction General Journal Debit Credit Accounts receivable 54,000 1 1 Bonus receivable 1,350 Service revenue 55,350 2 2 Service revenue 3,600 3,600 Bonus receivable 3 54,000 Accounts receivable Bonus receivable 450 Service revenue 54,450 18,000 4 Cash 4 Bonus receivable 3,600 Service revenue 14,400