A B C – DISSOLUTION

ANS: 600,000

Bank A and B – Bank X

Bank A Bank
B
Beginning capital 5,000,000 5,000,000
2020, net income share 1,600,000 1,600,000
2021, net income share 400,000 400,000

2020
Gross profit 4,000,000
Bank B shares 40%
Net share for B 1,600,000

2021
Gross profit 5,000,000
Dividends (4,000,000)
Realized gross profit 1,000,000
Bank B shares 40%
Net share for B 400,000

ANS: (2) 7,000,000

(3) ZERO USING COST METHOD
_____________________________________________________________________
ABS CONSTRUCTION CO

Advances to customer (100M x 5%)

5,000,000
Progress billings (100M x 50%) 50,000,000
Accrued billings (100M x 10%) (10,000,000)
Advance payment (100M x 8%) (8,000,000)
Adjusted progress billings 32,000,000
Residual rate in retention 90%
Collections from progress billings 28,800,000
(4) Total collection 33,800,000

SLIMER INC
2020 2021
Construction price 8,400,000 8,400,000
Cost incurred each year 3,600,000 2,000,000
Cost incurred in prior years 0 3,600,000
Cost actually incurred to date 3,600,000 5,600,000
Estimated cost to complete 2,400,000 0
Total estimated cost 6,000,000 5,600,000
Estimated gross profit 2,400,000 2,800,000
% of completion - 100%
Recognized gross profit 0 2,800,000
Prior years profit 0 0
(5)RGP 0 2,800,000

GOSHEN

Cost incurred to date 2,550,000

(6)Add: estimated cost(Squeezed) 1,700,000
Total cost 4,250,000
Divide: cost (squeezed) 2,550,000
% of completion 60%

CP 5,000,000
% 60
Revenue 3,000,000
Cost 2,550,000
Gross profit 450,000
PGP 100,000
RGP 350,000

AP CORP

Downpayment 750,000
Notes receivable
Face amount 4,250,000
/ installment prd 5
Installment value 850,000
x pvf 3.79079
PV note 3,222,172
(7)Initial franchise fee 3,972,172
Contingent fee
Sales 2,500,000
% of CFF 15% 375,000
Interest income
NR PV 3,222,171
% interest 10% 322,217
(8)Total revenue 4,669,389

CONEY ISLAND
Downpayment 25,000
PV notes 41,402
(9)Total revenue 66,402

SHAMROCK

Sales 74,000
Sales discount (600)
Net sales 73,400
Cost of sales
Inventory cost 50,000
Freight cost 2,000
Ending inventory (10,400) 41,600
Gross profit 31,800
Operating expenses
Bad debt 1600
Transportation fee 3,000
Advertising expense 500
Commission expense
24,000 x 5% 1200
29,400 x 10% 2940 (9,240)
(10) Net income 22,560

Cash sales 24,000

AR collection 29,400
Total cash 53,400
Commission expense (4,140)
Freight collect (2,000)
Freight prepaid (3,000)
(11) Net remittance 44,260

FFC

PO COST ALLOCATION
CC 2yrs (50 x 120% x 2yrs) 120
Operation (20 x 140% x 8yrs) 224
Reconditioning (10 x 110%) 11

Year PO ALLOCATION REVENUE INCURRED

1 CC 120/2 60
2 CC 120/2 60 (12)
3 OS 224/8 28
4 OS 224/8 28
5 RC 224/8 28 (13)
Books of ABC Co

Deferred gross profit, beg 114,000

Deferred gross profi, end
2019 transactions
Installment receivable 48,750
x gross profit rate 23% (11,250)
2020 transactions
Installment receivable 270,000
X gross profit rate 25% (67,500)
(15) Total realized gross profit 35,250