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21. Milan Construction Company uses the percentage-of-completion med ny uses the percentage-of-completion method of accounting. In 2010, Milan began work on a contract it had received which provided for a contract price of $7,400,000. Other details follow: 2010 Costs incurred during the year $3,600,000 Estimated costs to complete as of December 31 2,400,000 Billings during the year 3,300,000 Collections during the year 1,950,000 What should be the gross profit recognized in 2010? a. $300,000 b. $4,440,000 c. $840,000. d. $1,400,000 22. Squaw Construction Co. has consistently used the percentage-of-completion method of recognizing revenue. During 2009, Squaw entered into a fixed-price contract to construct an office building for $6,000,000. Information relating to the contract is as follows: At December 31 2009 2010 15% 45% $4,500,000 $4,800,000 300,000 720,000 Percentage of completion Estimated total cost at completion Gross profit recognized (cumulative) Contract costs incurred during 2010 were a. $1,440,000 b. $1,485,000. c. $1,575,000 d. $2,160,000. 8. Norman Corporation acquired land, buildings, and equipment from a bankrupt company at a lump-sum price of $132,000. At the time of acquisition Norman paid $12,000 to have the assets appraised. The appraisal disclosed the following values: Land $96,000 Buildings 76,800 Equipment 19,200 What cost should be assigned to the land, buildings, and equipment, respectively? a. $96,000, $76,800, and $19,200. b. $66,000, $52,800, and $13,200. C. $72,000, $57,600, and $14,400. d. $48,000, $48,000, and $48,000. 6. The following information is available for Sorensen Company Allowance for doubtful accounts at December 31, 2010 $ 8,000 Credit sales during 2011 400,000 Accounts receivable deemed worthless and written off during 2011 9,000 As a result of a review and aging of accounts receivable in early January 2012, however, it has been determined that an allowance for doubtful accounts of $7,500 is needed at December 31, 2011. What amount should Sorensen record as bad debt expense for the year ended December 31, 2011? a. $6,500 b. $7,500 C. $8,500 d. $15,500