How much was the net profit or loss of Aircon

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Reference no: EM133094984

Accounting For Special Transactions

Problem Solving

Question 1. A and B formed a joint operation. The following were the transactions during the year:

	A	B
Total purchases	400	320
Total sales	960	720
Expenses paid	800
Other income		40

The joint operation was completed at the end of the year. Each joint operator is entitled to a 10% commission on its purchases and a 20% commission on its sales. Any remaining profit or loss is divided equally. How much is the profit (loss) of the joint operation?

Question 2. At contract inception, ABC Co. assesses its performance obligations in the contract and concludes that it has a single performance obligation that is satisfied over time. ABC Co. determines that the measure of progress that best depicts its performance on the contract is "cost-to-cost" method.
a. How much is the revenue recognized in 20x1?
b. How much is the cost of construction recognized as expense in 20x2?
c. How much is the gross profit recognized in 20x3?

Question 3. The license provides Customer X the right to use Entity A's patented processes. Customer X continues to operate using its trade name and has the discretion of developing a new product name for the products it will produce using the patented processes. The license does not explicitly require Entity A to undertake activities that will significantly affect the intellectual property to which Customer A has rights. Neither does Customer X expect that Entity A will undertake such activities. Entity A grants the license to Customer X on December 31, 20x1. How much revenue from the franchise contract will Entity A recognize in 20x1?

Question 4. The license provides Customer X the right to use Entity A's patented processes. The agreement requires Customer X to discontinue using its trade name and instead use Entity A's trade name. Customer X is bound by the terms of the contract to abide with Entity A's policies on the use of the processes but is given the right to any subsequent modifications to the processes. How much revenue from the franchise contract will Entity A recognize in 20x1?

Question 5. Aircon, Inc. consigned ten one-horsepower air conditioning units to Argy Trading and paid ?2,000 for the freight out. The consignee is allowed a commission of 5% on sales. Argy Trading submitted an account sales on its transactions for the period as follows:

Sales (6 units, including 12.5% gross profit)		72,000
Less: Advances to consignor	10,000
Selling expenses	800
Installation and delivery	1,200
Commission	7,200	19,200
Net remittance		52,800

How much was the net profit or loss of Aircon on the consignment?

Question 6. CR Manufacturing Co. consigned to CE Trading Corp. twelve (12) Sony colored TV sets which cost ?9,000 each. Freight out was paid by the consignor in the amount of ?600. CE Trading sold eight (8) sets, rendered an account sales, and remitted the amount of ?82,600 after deducting the following from the selling price of the sets sold:

Commission on selling price	12%
Selling expenses	1,200
Cost of antennae given free	1,400
Delivery and installation	2,800

a. What is the total selling price of the eight (8) sets sold by CE Trading Corp.?
b. What is the net profit of CR Manufacturing Co. on the eight (8) sets sold by CE Trading Corp.?

Attachment:- Activities.rar

Reference no: EM133094984

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