Reference no: EM132865442

Questions -

Q1. Timber & Trees Construction Co (TTCC) enters into a contract on September 1, 2020 to construct five decks adjacent to a commercial building.

The customer has agreed to pay $10,000 for each deck (total $50,000). The terms of the contract call for a 35% deposit at time of contract signing and payment of the balance as each deck is completed.

TTCC has a December 31 year end. As at December 31, 2020 two decks are completed. The remaining 3 were completed in 2021. The cost to TTCC of constructing each deck is $7,000, which it pays in cash.

How much revenue will TTCC recognized in 2020 related to these Decks?

$20,000?

$17,500?

$7,000?

$6,000?

Q2. Denali Inc (DENALI) purchased a new piece of office equipment from Office Supply Co (OFFICE). The equipment had a list price of $2,900.

DENALI negotiated the payment terms and OFFICE has agreed to accept a down payment of $800 and a $2,100, three-year note payable at $798 per year.

The company's banker has suggested that an appropriate market rate is 11% per annum for loans that mature in one year or less and 14% for loans with longer maturities.

At what amount will the note be recorded at in the accounting records?

$2,100?

$1,853?

$3,821?

$3270?