* In 20x1, Build Construction Corporation contracted to build a motel. The contract price is $600,000 and the total cost is estimated as $400,000. Over the construction period there has been no change in either the contract price or the estimated total cost. Costs incurred for 20x1 and 20x2 are $200,000 and $160,000, respectively. How much gross profit should be recognized in 20x1 under the percentage-of-completion method? $120,000

$100,000

$160,000

$80,000

*On March 1 a sale is made and the customer has a right to return the good which expires April 29. There is no ability to predict the amount of returns.

• An asset of Right to Recovery would be recorded on March 1.

• An account receivable would be recorded on April 29.

• A sale would be recorded on March 1.

• Inventory would not be reduced until April 29.

*The following information is available from the records of XYZ Corporation for the year ended December 31, 20x2: Sales: $500,000 Beginning Inventory: 100,000 Purchases: 300,000 Historical Gross Margin: 40% Year End Physical Inventory: 60,000 Assume also that a significant part of inventory was missing, that all sales and purchases have been properly recorded, and that the gross margin ratio has always been maintained. How much might the company reasonably estimate as the missing inventory at year end?

• $120,000

• $20,000

• $40,000

• $100,000