Study Guides (390,000)
CA (150,000)
UTSC (10,000)
MGA (100)
Daga (20)
Midterm

# MGAC01H3 Study Guide - Midterm Guide: Gross Profit, Net Income, Current Liability

Department
Financial Accounting
Course Code
MGAC01H3
Professor
Daga
Study Guide
Midterm

This preview shows page 1. to view the full 5 pages of the document.
MGAC01 Practice Midterm (midterm used in the past sessions) Solutions
SOLUTION TO QUESTION 1
1. A
2. C
3. C
4. B
5. A
6. C
7. C
8. D
9. C
10. A
11. B
12. B
13. C
14. D
15. D
16. B
17. B
18. You decide!

Unlock to view full version

Only page 1 are available for preview. Some parts have been intentionally blurred.

SOLUTION TO QUESTION 2
(a) Costs to date \$801,000
Less materials on job site (51,000)
\$750,000
Costs Incurred to Date
—————————— = Percentage of Completion
Total Estimated Costs
\$750,000
————— = 50%
\$1,500,000
(b) 50% × \$2,000,000 = \$1,000,000
Costs incurred 750,000
Income \$ 250,000
(c) Construction Expense............................................................................... 750,000
Construction in Process ............................................................................ 250,000
Revenue from Long-term Project ................................................ 1,000,000
(d) Current Asset
Accounts receivable \$135,000 (\$1,115,000 \$980,000)
Current Liability
Billings in excess of contract costs and
recognized profit \$115,000 (\$1,115,000 \$1,000,000)
(e) Total loss reported in 2008
Contract price \$2,000,000
Estimated cost to complete 2,050,000
Amount of loss to be reported \$ (50,000)