[Skooby]

I can't show what I have already because I have no idea how to do this. I can't even begin to work the problem. I emailed the instructor and he said the answers are NOT in journal entry form, but all the examples are journal entry. Here is the problem:

Smith company received a contract on Sep. 30, 2010 to build a warehouse over a period of 18 months. The contract price was $600,000 and the estimated cost to build was $400,000. The actual (and estimated) costs incurred and the payments made by the purchases are as follows:

First column is Costs, second is Payment

Sep. 30-Dec 31, 2010; $120,000; $90,000
Jan. 1 - Dec. 31, 2011; $240,000; $210,000
Jan. 1 - Mar. 31, 2012; $40,000; $300,000

Compute the amount of revenue, expense, and gross profit each year for each of the following methods.

a. Revenue recognition at the time of sale (completion)
b. Revenue recognition during production
c. Revenue recognition at the tie of cash receipt
d. Cost revocery (compute only the gross profit)

Thanks for any help.

[morgaine300]

I can't help with the different methods themselves cause that's intermediate stuff I haven't had since class (and have never done in real life). But I might be able to help straighten up the confusion over what your teacher said... no, the problem isn't looking for journal entries. It's asking for the amounts only. Keep in mind that these amounts are exactly what would go into those journal entries, even if you don't make them. (That is, you have to calculate them to do a journal entry, so they are tied together.) Except gross profit isn't an account -- it's the difference between the revenue and expense, i.e. in total gross profit is $200,000. So if you can figure out the journal entry, just pull the revenue and expense amounts out of it, and gross profit for that year is the difference.

So looking back at those journal entries to follow how they came up with the amounts can still help.

[rehmanvohra]

Please follow this link which will help you. Please read the power point presentation slides to understand the topic.

Kieso, Weygandt, Warfield: Intermediate Accounting, 13th Edition - Student Companion Site