Accounting question-Excel



This needs to be done in EXCEL.You are the Senior Accountant for the Batty Corporation, which has several divisions. They each keep their own accounting books and have chosen the appropriate method of revenue recognition based on their operations. 


Bat’s Electronics Division







Bat’s Electronics Division sells computers through agents in various cities. Agents send orders and down payments to our company. The division then ships the goods F.O.B. shipping point directly to the customers. Revenue is recognized at the point of sale.


Additional Financial Data




Orders for fiscal year 2012

 $                      3,000,000



Down payments collected in 2012

 $                          300,000



Billed and shipped in 2012

 $                      2,400,000



Freight billed in 2012

 $                            70,000



Commissions paid to agents (after ship to customer)




Warranty returns as % of sales







Nickle Construction Division







The Nickle Construction Division was working on one project for the 2012 fiscal year. They use the percentage of completion revenue recognition method.


Contract for new administration building




Total contract amount

 $                    60,000,000



Contract grant date

August 14, 2012



Construction began

September 1, 2012







Estimated cost to complete at beginning of contract

 $                    52,000,000



Estimated time to complete project

2 years






As of Dec 31, 2012




Construction costs incurred to date

 $                    14,140,000



Billings to date

 $                    19,500,000



Expected costs to complete

 $                    36,360,000







Reece Book Distribution Division







Reece Book Distribution Division sells to national bookstores.  Our division allows for up to 25% of sales in returns. For the past 4 years, returns have averaged 20%. We record revenue based on revenue recognition when the right of return exists.



Total sales for 2012

 $                      9,000,000



Sales still available for return for six months

 $                      2,000,000



Actual returns on sales not returnable




2011 sales collected in 2012

 $                      2,500,000



2011 sales returned in 2012








(a) We have studied several methods of revenue recognition. Define and describe each of the following methods of revenue recognition and indicate whether each is in accordance with generally accepted accounting principles.



   – Point of sale




   – Completion-of-production




   – Percentage-of-completion




   – Installment-sales




(b) Calculate the revenue to be recognized in fiscal year 2012 for each division of Patty Corporation in accordance with generally accepted accounting principles. Show all calculations for full credit.








Problem 2: 


George Company







George Company provided the following financial information for its installment-sales for the current year.


Financial Data




Installment sales for current year

 $               800,000



Cost of goods sold on installment basis

 $               600,000



Payments by customers

 $               320,000



Repossessed merchandise – unpaid balances

 $                 52,000



Repossessed merchandise – estimated value

 $                 26,800











a) Prepare journal entries for the end of the year based on the information above.





b) Prepare the entry to record the gross profit realized in the current year.




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