(1) Ireland Corporation obtained a $40,000 note receivable from a customer on Ju

Question

(1) Ireland Corporation obtained a $40,000 note receivable from a customer on June 30, 2018. The note, along with interest at 5%, is due on June 30, 2019. On September 30, 2018, Ireland discounted the note at Cloverdale bank. The bank's discount rate is 9%. What amount of cash did Ireland receive from Cloverdale Bank?

$37,165

$36,4000

$40,500

$39,165

(2) Beavis Construction Company was the low bidder on a construction project to build an earthen dam for $1,900,000. The project was begun in 2017 and completed in 2018. Cost and other data are presented below:

Assume that Beavis recognizes revenue on this contract over time according to percentage of completion.

Required:
Compute the amount of gross profit recognized during 2017 and 2018.

Part 2 of 2 Assume that Beavis recognizes revenue upon completion of the project.

Required:
Compute the amount of gross profit recognized during 2017 and 2018

2017 2018 Costs incurred during the year $ 420,000 $ 1,200,000 Estimated costs to complete 980,000 0 Billings during the year 450,000 1,450,000 Cash collections during the year 350,000 1,550,000

Assume that Beavis recognizes revenue on this contract over time according to percentage of completion.

Required:
Compute the amount of gross profit recognized during 2017 and 2018.

Part 2 of 2 Assume that Beavis recognizes revenue upon completion of the project.

Required:
Compute the amount of gross profit recognized during 2017 and 2018

Explanation / Answer

Correct answer is D

2.

PV factor Note amount 40000 0.9325 37300 Interest 40000*5% 2000 0.9325 1865 42000 39165

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