Exam 8: Revenue Recognition

Tussle Company began operations on January 1,2014,and appropriately uses the installment method of accounting.The following data are available for 2014 and 2015: The realized gross profit for 2015 is

The completed-contract method (as opposed to the percentage-of-completion method)of accounting for revenue from long-term construction contracts should be used in which of the following circumstances?

Assume the percentage-of-completion method of revenue recognition is used on a long-term construction contract.Under this method,revenues that are earned but unbilled at the balance sheet date should be disclosed

The following data relate to a construction job started by Harrington Co.during 2014: -See Harrington Co.information above.Under the percentage-of-completion method,how much should Harrington recognize as gross profit for 2014?

When the percentage-of-completion method of accounting for long-term construction projects is used,why is Construction in Progress increased by the annual recognized gross profit on long-term construction contracts?

Hussong,Inc. ,appropriately uses the installment sales method of revenue recognition.The company sold $1,500,000 on installment accounts during 2014.The cost of items sold was $900,000.At December 31,2014,Hussong reported a balance of $100,000 in the Deferred Gross Profit account.How much cash did Hussong collect on installment contracts during 2014?

When comparing the percentage-of-completion and completed-contract methods of accounting for long-term construction contracts,both methods will report the same

Santos Company allows a liberal return privilege on its normal sales.Products purchased by customers may be returned within 90 days of purchase if in resalable condition,for a full refund.The following information relates to 2014: Average gross profit percentage 25% Total sales (including actual returns) $100,000 Actual returns $ 15,000 Historical ratio of actual returns to sales 20% Sales whose return privilege has expired at The end of 2014 (does not include actual Returns) $ 40,000 Assuming that all criteria of SFAS No.48,"Revenue Recognition When Right of Return Exists," are not met,what is the gross margin to be reported by the company in 2014?