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31) Simple Inc. had sales of $1,500,000, including:

• $30,000 of goods sold that were on consignment from an unrelated company on December 28, 2011

• $10,000 of goods shipped F.O.B shipping point on December 28, 2011.

• $20,000 of goods shipped F.O.B. destination point on December 31, 2011.

On its income statement, what amount of net sales should Simple Inc. record for 2011?

A) $1,440,000

B) $1,470,000

C) $1,480,000

D) $1,490,000

32) Philips Corp. is unsure how to record the following transactions:

• $60,000 of goods shipped F.O.B shipping point on December 28, 2011.

• $50,000 of goods shipped F.O.B. destination point on December 31, 2011.

What amount of sales related to these two transactions should Philips Corp. record in fiscal 2011?

A) $0

B) $50,000

C) $60,000

D) $110,000

33) Here are some financial records for Accounting Plus Magazine which started operations in October 2012. Sales for its first month were as follows:

Subscriptions sold

Price per subscription

Subscription start date

Subscription term (months)

16,400

25

Oct 1

6 months

11,800

40

Oct 1

12 months

What would be the subscription revenue to be recognized for the month of Oct 2012? (Round to the nearest dollar).

A) $68,333

B) $107,667

C) $774,333

D) $882,000

34) Here are some financial records for Accounting Plus Magazine which started operations in October 2012. Sales for its first month were as follows:

Subscriptions sold

Price per subscription

Subscription start date

Subscription term (months)

16,400

25

Oct 1

6 months

11,800

40

Oct 1

12 months

What would be the deferred revenue at Oct 31, 2012? (Round to the nearest dollar).

A) $107,667

B) $341,667

C) $774,333

D) $882,000

35) Which of the following methods of revenue recognition would be selected when a vendor has another firm acting as its selling agent?

A) Cost recovery method.

B) Returned goods method.

C) Installment sales method.

D) Consignment sales method.

36) Lagory Co. started a contract in June 2011 to build a bridge at a fixed price of $14 million. The bridge was to be completed by October 2013. Total cumulative costs incurred by the end of December 2011 and 2012 were $2 million and $6 million, respectively. Lagory Co. is unable to estimate the total costs of the project prior to completion. Final costs at the end of the project totaled $11 million. How much revenue will Lagory Co. report in 2012?

A) $2,000,000

B) $3,000,000

C) $4,000,000

D) $14,000,000

37) Sunshine Contractors started a contract in January 2011 to build a bridge at a fixed price of $14 million. The bridge was to be completed by October 2013. Total cumulative costs incurred by the end of December 2011 and 2012 were $2 million and $6 million, respectively. Sunshine is unable to estimate the total costs of the project prior to completion. Final costs at the end of the project totaled $11 million. How much cost of sales will Sunshine report in 2013?

A) $3,000,000

B) $5,000,000

C) $8,000,000

D) $11,000,000

38) Algae builds large ships and uses the percentage of completion method of revenue recognition. The following information pertains to the construction contracts it had in place as of its December 31, 2012 year-end.

2011

2012

Cost incurred to date

200 million

400 million

Costs to complete contracts

600 million

600 million

Total price of contracts outstanding at December 31, 2012

1,300 million

1,300 million

How much revenue will Algae recognize in 2011?

A) $260 million

B) $325 million

C) $433 million

D) $1,300 million

39) Which statement best explains the percentage of completion method?

A) An accounting method that recognizes revenue and expenses on a contract only after it is completed.

B) An accounting method that recognizes revenue and expenses on a contract in proportion to the degree of progress.

C) An accounting method that recognizes an amount of revenue equal to the costs that are expected to be recovered on the contract.

D) An accounting method that recognizes revenue and expenses based on the fair value of the contract.

40) How is revenue recognized on a cost plus 7% contract?

A) Revenue is recognized only after the contract is completed.

B) Revenue and expenses are recognized in proportion to the degree of progress.

C) Record an amount of revenue equal to the costs that are expected to be recovered on the contract.

D) Revenue equal to the cost plus 7% profit will be recorded each year.

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