Appropriate journal entry for the denton company


Problem 1:

The Bryan Construction Company received a contract to build a new dormitory complex. The selling price of $30,000,000 will be paid when the complex is completed. The costs to construct the complex are as follows:

      Year       Cost    
      19X9    $4,000,000
      20X0      9,000,000
      20X1      8,000,000
                $21,000,000

a. Assuming the contract is with a large state-supported school which is very strong financially, how much revenue should The Bryan Construction Company recognize in 19X9?

b. Assume, instead, that the contract is with a school whose financial status is uncertain, and hence the probability of collection is uncertain, how much revenue should Bryan recognize in 19X9?

Problem 2:

The Denton Company had the following balances at January 1, 20X0:

      Accounts Receivable                            $250,000 Debit
      Allowance for Uncollectible Accounts      16,000 Credit

The following activity occurred during 20X0:

1. Cash sales were $800,000

2. In addition, cash sales were made to special customers who were given a 4% trade discount. The normal selling price (before the discount) was $200,000.

3. Credit sales were $2,800,000

4. Collections on credit sales: cash collections were $2,608,000; however, credit customers also took advantage of $42,000 worth of cash discounts offered.

5. Sales returns and allowances on credit sales were $26,000. A full credit was given by The Denton Company.

6. Write-offs of bad debts were $17,100.

7. Bad debt recoveries were $300.

8. The December 31, 20X0 estimation of bad debts is 7% of the ending accounts receivable balance.

a. Prepare the appropriate journal entry for The Denton Company for each of the transactions noted above.

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Accounting Basics: Appropriate journal entry for the denton company
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