Instructions:
Create a single Excel document with one worksheet/tab for each problem.
Problem 1
On February 1, 2007, York Contractors agreed to construct a building at a contract price of $6,000,000. York estimated total construction costs would be $4,000,000 and the project would be finished in 2009. Information relating to the costs and billings for this contract is as follows:
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2007
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2008
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2009
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Total costs incurred to date
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$1,500,000
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$2,640,000
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$4,600,000
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Estimated costs to complete
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2,500,000
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1,760,000
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-0-
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Customer billings to date
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2,200,000
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4,000,000
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5,600,000
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Collections to date
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2,000,000
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3,500,000
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5,500,000
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Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and for completed-contract accounting, show the gross profit that should be recorded for 2007, 2008, and 2009. Create your response on a separate Excel spreadsheet.
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Percentage of Completion
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Completed-Contract
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Gross Profit
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Gross Profit
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2007
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2007
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2008
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----------------------------
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2008
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----------------------------
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2009
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----------------------------
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2009
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----------------------------
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Problem 2
Part A:
Wells Company has a beginning inventory in year one of $300,000 and an ending inventory of $363,000. The price level has increased from 100 at the beginning of the year to 110 at the end of year one. Calculate the ending inventory under the dollar-value LIFO method.
Prepare your response on a separate Excel spreadsheet as directed on the Problem Set 2 instructions.
Part B:
At the end of year two, Wells' inventory is $437,000 in terms of a price level of 115 which exists at the end of year two. Calculate the inventory at the end of year two continuing the use of the dollar-value LIFO method.
Prepare your response on a separate Excel spreadsheet as directed on the Problem Set 2 instructions.
Problem 3
The December 31, 2008 inventory of Dwyer Company consisted of four products, for which certain information is provided below.
Replacement Estimated Expected Normal Profit
Product Original Cost Cost Disposal Cost Selling Price on Sales
A $25.00 $22.00 $6.50 $40.00 20%
B $42.00 $40.00 $12.00 $48.00 25%
C $120.00 $115.00 $25.00 $190.00 30%
D $18.00 $15.80 $3.00 $26.00 10%
Directions Using the lower-of-cost-or-market approach applied on an individual-item basis, compute the inventory valuation that should be reported for each product on December 31, 2008. Prepare your response on a separate Excel spreadsheet as directed on the Problem Set 2 instructions.
Problem 4
Flynt Company was formed on December 1, 2007. The following information is available from Flynt 's inventory record for Product X.
Units Unit Cost
January 1, 2008 (beginning inventory) 1,600 $18.00
Purchases:
January 5, 2008 2,600 $20.00
January 25, 2008 2,400 $21.00
February 16, 2008 1,000 $22.00
March 15, 2008 1,800 $23.00
A physical inventory on March 31, 2008, shows 2,500 units on hand.
Directions : Prepare schedules to compute the ending inventory at March 31, 2008, under each of the following inventory methods: Prepare your response on a separate Excel spreadsheet as directed on the Problem Set 2 instructions.
(a) FIFO.
(b) LIFO.
Show supporting computations in good form.
Problem 5
A machine cost $500,000 on April 1, 2008. Its estimated salvage value is $50,000 and its expected life is eight years.
Directions :
Calculate the depreciation expense (to the nearest dollar) by each of the following methods, showing the figures used on a separate Excel spreadsheet as directed on the Problem Set 2 instructions.
a) Straight-line for 2008
b) Double-declining balance for 2009