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Inter. Acc. (Assigment) - 1

Jupiter Company sells goods to Danone Inc. for $700,000 to be paid in 1 year, with a cash price of $610,000 if paid within 30 days and a $10,000 discount for immediate payment. Jupiter must record the sale transaction and report the proper revenue amount. Nilsen Company has a construction contract for $1,600,000 completed from 2012 to 2014. Journal entries must be prepared for 2013 using the percentage-of-completion method and gross profit calculated for each year under both percentage-of-completion and completed-contract methods. Several problems involve calculating deferred tax liability, pension fund returns, and journal entries for equipment leased under a 4-year agreement requiring equal annual

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64 views3 pages

Inter. Acc. (Assigment) - 1

Jupiter Company sells goods to Danone Inc. for $700,000 to be paid in 1 year, with a cash price of $610,000 if paid within 30 days and a $10,000 discount for immediate payment. Jupiter must record the sale transaction and report the proper revenue amount. Nilsen Company has a construction contract for $1,600,000 completed from 2012 to 2014. Journal entries must be prepared for 2013 using the percentage-of-completion method and gross profit calculated for each year under both percentage-of-completion and completed-contract methods. Several problems involve calculating deferred tax liability, pension fund returns, and journal entries for equipment leased under a 4-year agreement requiring equal annual

Uploaded by

hudeyfaadam97
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SIMAD University

Assignment

Intermediate Accounting

Instructions

Submit the assignment in hand-writing form


Submission Date: 31-May-2023
Part One: Revenue Recognition
Problem #1
Jupiter Company sells goods on January 1 that have a cost of $500,000 to Danone Inc. for $700,000, with
payment due in 1 year. The cash price for these goods is $610,000, with payment due in 30 days. If Danone
paid immediately upon delivery, it would receive a cash discount of $10,000.
Required
(a) Prepare the journal entry to record this transaction at the date of sale.
(b) How much revenue should Jupiter report for the entire year?

Problem #2
During 2012, Nilsen Company started a construction job with a contract price of $1,600,000. The job was
completed in 2014. The following information is available.

Required
(a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of completion
method is used.
(b) Prepare all necessary journal entries for 2013.
(c) Compute the amount of gross profit to be recognized each year, assuming the completed-contract
method is used.

Part Two: Income Tax


Problem #3
In 2012, Amirante Corporation had pretax financial income of $168,000 and taxable income of $120,000.
The difference is due to the use of different depreciation methods for tax and accounting purposes. The
effective tax rate is 40%.
Required
Compute the amount to be reported as income taxes payable at December 31, 2012.
Problem #4
Oxford Corporation began operations in 2012 and reported pretax financial income of $225,000 for the
year. Oxford’s tax depreciation exceeded its book depreciation by $40,000. Oxford’s tax rate for 2012 and
years thereafter is 30%.
Required
In its December 31, 2012, balance sheet, what amount of deferred tax liability should be reported?

Part Three: Pension Fund


Problem #5
For Warren Corporation, year-end plan assets were $2,000,000. At the beginning of the year, plan assets
were $1,780,000. During the year, contributions to the pension fund were $120,000, and benefits paid were
$200,000. Compute Warren’s actual return on plan assets.

Part Four: Lease


Problem #6
Waterworld Company leased equipment from Costner Company. The lease term is 4 years and requires
equal rental payments of $43,019 at the beginning of each year. The equipment has a fair value at the
inception of the lease of $150,000, an estimated useful life of 4 years, and no salvage value. Waterworld
pays all executory costs directly to third parties. The appropriate interest rate is 10%.
Required
Prepare Waterworld’s January 1, 2012, journal entries at the inception of the lease.

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