1/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 $780,000 that cost Lake $390,000. Lake collected$260,000 in 2017, $260,000 in 2018, and $260,000 in 2019 associatedwith those sales. In 2018, Lake sold jet skis with a total price of$1,380,000 that cost Lake $828,000. Lake collected $460,000 in2018, $368,000 in 2019, and $368,000 in 2020 associated with thosesales. In 2020, Lake also repossessed $184,000 of jet skis thatwere sold in 2018. Those jet skis had a fair value of $69,000 atthe time they were repossessed.
In 2019, Lake would recognize realized gross profit of:
Multiple Choice
$260,000.
$0.
$420,000.
$628,000.
2/ Johnson sells $112,000 of product to Robbins, and alsopurchases $12,400 of advertising services from Robbins. Theadvertising services have a fair value of $9,200. Johnson shouldrecord revenue on its sale of product to Robbins of:
Multiple Choice
$99,600
$102,800
$108,800
$112,000
3/ Video Planet (“VP”) sells a big screen TV package consistingof a 60-inch plasma TV, a universal remote, and on-siteinstallation by VP staff. The installation includes programming theremote to have the TV interface with other parts of the customer’shome entertainment system. VP concludes that the TV, remote, andinstallation service are separate performance obligations. VP sellsthe 60-inch TV separately for $1,280, sells the remote separatelyfor $80, and offers the installation service separately for $240.The entire package sells for $1,500.
Required:
How much revenue would be allocated to the TV, the remote, and theinstallation service?
| ItemDescription | AllocatedRevenue |
| TV | |
| Remote | |
| Installation | |
| Total revenue | $0 |
4/ Present and future value tables of $1 at 9% are presentedbelow.
| PV of $1 | FV of $1 | PVA of $1 | FVAD of$1 | FVA of $1 |
| 1 | 0.91743 | 1.09000 | 0.91743 | 1.0900 | 1.0000 |
| 2 | 0.84168 | 1.18810 | 1.75911 | 2.2781 | 2.0900 |
| 3 | 0.77218 | 1.29503 | 2.53129 | 3.5731 | 3.2781 |
| 4 | 0.70843 | 1.41158 | 3.23972 | 4.9847 | 4.5731 |
| 5 | 0.64993 | 1.53862 | 3.88965 | 6.5233 | 5.9847 |
| 6 | 0.59627 | 1.67710 | 4.48592 | 8.2004 | 7.5233 |
Ajax Company purchased a one-year certificate of deposit for itsbuilding fund in the amount of $190,000. How much should thecertificate of deposit be worth at the end of one years if interestis compounded at an annual rate of 9%?
Multiple Choice
$205,841.
$173,053.
$207,100.
$174,312.
