Questions -
Q1. During 2013, Rogue Corporation reported sales revenue of $610,000. Inventory at both the beginning and end of the year totaled $80,000. The inventory turnover ratio for the year was 5.0. What amount of gross profit did the company report in its income statement for 2013?
Q2. Furtastic manufactures imitation fur garments. On June 1, 2016, Furtastic made a sale to Willett's Department Store under terms that require Willett to pay $165,000 to Furtastic on June 30, 2016. In a separate transaction on June 15, 2016, Furtastic purchased brand advertising services from Willett for $15,000. The fair value of those advertising services is $6,500. Furtastic expects that 4% of all sales will prove uncollectible.
Required: Prepare the journal entries to record the transactions above
Q3. A construction company entered into a fixed-price contract to build an office building for $10 million. Construction costs incurred during the first year were $2 million and estimated costs to complete at the end of the year were $3 million.
How much gross profit will the company recognize in the first year using the percentage-of-completion method?
How much revenue will appear in the company's income statement in the first year using the percentage-of-completion method?