1/ Arizona Desert Homes (ADH) constructed a new subdivisionduring 2017 and 2018 under contract with Cactus Development Co.Relevant data are summarized below:

Contract amount		$	3,270,000
Cost:	2017		1,260,000
	2018		660,000
Grossprofit:	2017		890,000
	2018		460,000
Contractbillings:	2017		1,635,000
	2018		1,635,000

ADH recognizes revenue upon completion of the contract.

What is the journal entry in 2018 to record revenue?

Multiple Choice

• Construction in progress	460,000
  Cost ofconstruction	660,000
  Revenue fromlong-term contracts		1,120,000

• Accounts receivable	1,635,000
  Revenue fromlong-term contracts		1,635,000

• Construction in progress	1,350,000
  Cost ofconstruction	1,920,000
  Revenue fromlong-term contracts		3,270,000

• Costof construction	2,150,000
  Grossprofit	1,120,000
  Revenue fromlong-term contracts		3,270,000

2/ On December 15, 2018, Rigsby Sales Co. sold a tract of landthat cost $3,300,000 for $5,000,000. Rigsby appropriately uses theinstallment sales method of accounting for this transaction. Termscalled for a down payment of $440,000 with the balance in two equalannual installments payable on December 15, 2019, and December 15,2020. Ignore interest charges. Rigsby has a December 31year-end.

In its December 31, 2018, balance sheet, Rigsby would report:

Multiple Choice

• Installmentreceivables (net) of $4,560,000.

• Installmentreceivables (net) of $3,009,600.

• Realized gross profitof $149,600.

• Deferred gross profitof $149,600

3/ Lake Power Sports sells jet skis and other poweredrecreational equipment. Customers pay one-third of the sales priceof a jet ski when they initially purchase the ski, and then payanother one-third each year for the next two years. Because Lakehas little information about the ability to collect thesereceivables, it uses the cost recoverymethod to recognize revenue on these installmentsales. In 2017, Lake began operations and sold jet skis with atotal price of $750,000 that cost Lake $375,000. Lake collected$250,000 in 2017, $250,000 in 2018, and $250,000 in 2019 associatedwith those sales. In 2018, Lake sold jet skis with a total price of$1,200,000 that cost Lake $720,000. Lake collected $400,000 in2018, $270,000 in 2019, and $270,000 in 2020 associated with thosesales. In 2020, Lake also repossessed $260,000 of jet skis thatwere sold in 2018. Those jet skis had a fair value of $97,500 atthe time they were repossessed.

In 2017, Lake would recognize realized gross profit of:

Multiple Choice

• $0.

• $250,000.

• $375,000.

• $125,000.

4/ Indiana Co. began a construction project in 2018 with acontract price of $161 million to be received when the project iscompleted in 2020. During 2018, Indiana incurred $36 million ofcosts and estimates an additional $89 million of costs to completethe project. Indiana recognizes revenue over time and for thisproject recognizes revenue over time according to the percentage ofthe project that has been completed.

Indiana:

Multiple Choice

• Recognized $72.00million loss on the project in 2018.

• Recognized $36.00million loss on the project in 2018.

• Recognized $10.37million gross profit on the project in 2018.

• Recognized no grossprofit or loss on the project in 2018.