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Midterm

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


Department
Financial Accounting
Course Code
MGAC01H3
Professor
Daga
Study Guide
Midterm

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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!
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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)
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