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Exercise 7-5 (Recognition of Profit for Long-Term Contracts) Andre
Agassi Construction Company began operations January 1, 2008. During
the year, Andre Agassi Construction entered into a contract with
Lindsey Davenport Corp. to construct a manufacturing facility. At that
time, Agassi estimated that it would take 5 years to complete the
facility at a total cost of $4,500,000. The total contract price for
construction of the facility is $6,300,000. During the year, Agassi
incurred $1,185,800 in construction costs related to the construction
project. The estimated cost to complete the contract is $4,204,200.
Lindsey Davenport Corp. was billed and paid 30% of the contract price.
Exercise 7-8 (Installment-Sales and Cost-Recovery Methods) Kenny
Harrison Corp., a capital goods manufacturing business that started on
January 4, 2008, and operates on a calendar-year basis, uses the
installment-sales method of profit recognition in accounting for all its
sales. The following data were taken from the 2008 and 2009 records.
Exercise 8-9 (Computing Bad Debts and Preparing Journal Entries) The
trial balance before adjustment of Reba McIntyre Inc. shows the
following balances.