How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Neo Your Own Question

Neo
Neo, Tutor
Category: Homework
Satisfied Customers: 12044
Experience:  BS Accounting
Type Your Homework Question Here...
Neo is online now
A new question is answered every 9 seconds

1(Completed-Contract Method) Monat Construction Company, Inc.,

Resolved Question:

1(Completed-Contract Method) Monat Construction Company, Inc., entered into a firm fixedprice
contract with Hyatt Clinic on July 1, 2010, to construct a four-story office building. At that time,
Monat estimated that it would take between 2 and 3 years to complete the project. The total contract price
for construction of the building is $4,400,000. Monat appropriately accounts for this contract under the
completed-contract method in its financial statements and for income tax reporting. The building was
deemed substantially completed on December 31, 2012. Estimated percentage of completion, accumulated
contract costs incurred, estimated costs to complete the contract, and accumulated billings to the Hyatt
Clinic under the contract are shown below.
At At At
December December December
31, 2010 31, 2011 31, 2012
Percentage of completion 30% 70% 100%
Contract costs incurred $1,140,000 $3,290,000 $4,800,000
Estimated costs to complete the contract $2,660,000 $1,410,000 –0–
Billings to Hyatt Clinic $1,400,000 $2,500,000 $4,300,000
Instructions
(a) Prepare schedules to compute the amount to be shown as “Cost of uncompleted contract in excess
of related billings” or “Billings on uncompleted contract in excess of related costs” at December
31, 2010, 2011, and 2012. Ignore income taxes. Show supporting computations in good form.
(b) Prepare schedules to compute the profit or loss to be recognized as a result of this contract for the
years ended December 31, 2010, 2011, and 2012. Ignore income taxes. Show supporting computations
in good form.

2(Disclosures Required in Various Situations) Ace Inc. produces electronic components for
sale to manufacturers of radios, television sets, and digital sound systems. In connection with her examination
of Ace’s financial statements for the year ended December 31, 2011, Gloria Rodd, CPA, completed
field work 2 weeks ago. Ms. Rodd now is evaluating the significance of the following items prior to preparing
her auditor’s report. Except as noted, none of these items have been disclosed in the financial statements
or notes.
Item 1
A 10-year loan agreement, which the company entered into 3 years ago, provides that dividend payments
may not exceed net income earned after taxes subsequent to the date of the agreement. The balance of retained
earnings at the date of the loan agreement was $420,000. From that date through December 31,
2011, net income after taxes has totaled $570,000 and cash dividends have totaled $320,000. On the basis
of these data, the staff auditor assigned to this review concluded that there was no retained earnings
restriction at December 31, 2011.
Item 2
Recently Ace interrupted its policy of paying cash dividends quarterly to its stockholders. Dividends were
paid regularly through 2010, discontinued for all of 2011 to finance purchase of equipment for the company’s
new plant, and resumed in the first quarter of 2012. In the annual report dividend policy is to be
discussed in the president’s letter to stockholders.
Item 3
A major electronics firm has introduced a line of products that will compete directly with Ace’s primary
line, now being produced in the specially designed new plant. Because of manufacturing innovations, the
competitor’s line will be of comparable quality but priced 50% below Ace’s line. The competitor announced
its new line during the week following completion of field work. Ms. Rodd read the announcement in
the newspaper and discussed the situation by telephone with Ace executives. Ace will meet the lower
prices that are high enough to cover variable manufacturing and selling expenses but will permit recovery
of only a portion of fixed costs.
Item 4
The company’s new manufacturing plant building, which cost $2,400,000 and has an estimated life of
25 years, is leased from Wichita National Bank at an annual rental of $600,000. The company is obligated
to pay property taxes, insurance, and maintenance. At the conclusion of its 10-year noncancellable lease,
the company has the option of purchasing the property for $1. In Ace’s income statement, the rental payment
is reported on a separate line.
Instructions
For each of the items on page 1371, discuss any additional disclosures in the financial statements and
notes that the auditor should recommend to her client. (The cumulative effect of the four items should
not be considered.)
Submitted: 2 years ago.
Category: Homework
Expert:  Neo replied 2 years ago.
THIS ANSWER IS LOCKED!

You need to spend $3 to view this post. Add Funds to your account and buy credits.
Neo, Tutor
Category: Homework
Satisfied Customers: 12044
Experience: BS Accounting
Neo and 4 other Homework Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
< Last | Next >
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
  • I couldn't be more satisfied! This is the site I will always come to when I need a second opinion. Justin Kernersville, NC
  • Just let me say that this encounter has been entirely professional and most helpful. I liked that I could ask additional questions and get answered in a very short turn around. Esther Woodstock, NY
  • Thank you so much for taking your time and knowledge to support my concerns. Not only did you answer my questions, you even took it a step further with replying with more pertinent information I needed to know. Robin Elkton, Maryland
  • He answered my question promptly and gave me accurate, detailed information. If all of your experts are half as good, you have a great thing going here. Diane Dallas, TX
 
 
 

Meet The Experts:

 
 
 
  • Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    4520
    More than 5000 online tutoring sessions.
< Last | Next >
  • http://ww2.justanswer.com/uploads/BU/BusinessTutor/2012-2-2_115741_Kouki2.64x64.jpg Manal Elkhoshkhany's Avatar

    Manal Elkhoshkhany

    Tutor

    Satisfied Customers:

    4520
    More than 5000 online tutoring sessions.
  • http://ww2.justanswer.com/uploads/LI/lindaus/2012-6-10_04811_IMG20120609164157.64x64.jpg Linda_us's Avatar

    Linda_us

    Finance, Accounts & Homework Tutor

    Satisfied Customers:

    3121
    Post Graduate Diploma in Management (MBA)
  • http://ww2.justanswer.com/uploads/ComputersGuru/2010-02-13_051118_Photo41.JPG LogicPro's Avatar

    LogicPro

    Engineer

    Satisfied Customers:

    3035
    Expert in Java C++ C C# VB Javascript Design SQL HTML
  • http://ww2.justanswer.com/uploads/lanis/2009-4-1_233717_phput9xef_c1pm.jpg Lani S.'s Avatar

    Lani S.

    Tutor

    Satisfied Customers:

    2457
    Registered Nurse, Internet Researcher, Private Tutor
  • http://ww2.justanswer.com/uploads/chooser77/2009-08-18_162025_Chris.jpg Chris M.'s Avatar

    Chris M.

    M.S.W. Social Work

    Satisfied Customers:

    2341
    Master's Degree, strong math and writing skills, experience in one-on-one tutoring (college English)
  • http://ww2.justanswer.com/uploads/JawaadAhmed/2009-6-27_12137_SIs_SHadi.jpg F. Naz's Avatar

    F. Naz

    Chartered Accountant

    Satisfied Customers:

    1975
    Experience with chartered accountancy
  • http://ww2.justanswer.com/uploads/JK/jkcpa/2011-1-16_182614_jkcpa.64x64.jpg Bizhelp's Avatar

    Bizhelp

    CPA

    Satisfied Customers:

    1873
    Bachelors Degree and CPA with Accounting work experience