What is the realized gross profit reported on Euclid's 2012 income statement.

a. 105,000
b. 70,000
c. 30,000
d. 150,000
GP (2012) = 500,000 - 350,000 = 150,000
GP % (2012) = 150,000/500,000=30%
Cash collected from 2012 sales in 2012 = 100,000
Realized GP (2012) = 100,000 x 30% = 30,000
Euclid's Plumbing reported the following information.
Installment Sales
2012: $500,000
2013: $750,000
Cost of Sales
2012: 350,000
2013: 600,000
Cash Receipts from:
2012 Sales:
2012: 100,000
2013: 200,000
2013 Sales
2013: 300,000

What is the unrealized (deferred) gross profit reported on Euclid's 2013 balance sheet.
a. 50,000
b. 150,000
c. 120,000
d. 100,0000
Deferred GP = Total - Realized = 300,000-150,000 = 150,000

See Ch. 18 #19 for more info

20. Falton Co. had the following first-year amounts related to its $9,000,000
construction contract:
Actual costs incurred and paid
$2,000,000
Estimated costs to complete
6,000,000
Progress billings
1,800,000
Cash collected
1,500,000
What amount should Falton recognize as a current liability at year end, using the
percentage-of-completion method?
A) $0
B) $200,000
C) $250,000
D) $300,000
Answer (A) is correct. Accumulated costs and recognized gross profit are debited to
construction in progress. If the balance in this inventory account exceeds progress
billings, a current asset is recorded. A liability is recorded when progress billings exceed
the balance in construction in progress. Total estimated gross profit is $1,000,000
($9,000,000 price - $2,000,000 costs - $6,000,000 estimated costs). Gross profit for the
first year is $250,000 {$1,000,000 total GP × [$2,000,000 first-year costs ÷ ($2,000,000
+ $6,000,000 costs to complete)]}. Thus, the balance in construction in progress