Point of Sale method- Recognizes revenue earned at POS, because cash is received on site or it is rece

Completed contract method-Revenue is recognized when contract is complete

Percentage of completion- On going revenue recognition (long term contruction contracts) works in pr
Installment sale- Pushed off till the future

g transaction.

Point of sale
Revenue is the amount of goods billed and shipped. Point of sale (pos)
F.O.B shiping point "free on board shipping point" buyer takes delivery of goods being shipped
to it by a supplier once the goods leave the supplier's shipping dock.
Revenue for 2012 is $2,400,000

Pat'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.

ds being shipped
Additional Financial Data
Orders for fiscal year 2012
Down payments collected in 2012
Billed and shipped in 2012
Freight billed in 2012
Commissions paid to agents (after ship t
Warranty returns as % of sales

hrough agents in various cities. Agents

mpany. The division then ships the
customers. Revenue is recognized at

$3,000,000
$300,000
$2,400,000
$70,000
10%
1%

Percentage of completion
Contract Price

60,000,000
Costs:
Acctual costs to date
14,140,000
Estimated cost to complete 36,360,000

Total cost

50,500,000

Estimated profit
Percent of contract complete
(cost to date/est total complete)
Revenue recognized in 2012
(contract rev*%complete

9,500,000
39%

23,333,333

The Pickle Construction Division was working on

year. They use the percentage of completion re

Contract for new administration building

As of Dec 31, 2012

he Pickle Construction Division was working on one project for the 2012 fiscal
ear. They use the percentage of completion revenue recognition method.

ontract for new administration building

Total contract amount
Contract grant date
Construction began

Estimated cost to complete at beginning of contrac

Estimated time to complete project

s of Dec 31, 2012

Construction costs incurred to date
Billings to date
Expected costs to complete

$60,000,000
14-Aug-12
1-Sep-12

$52,000,000
2 years

$14,140,000
$19,500,000
$36,360,000

Right of return
Sales for 2012
**Less: sales returns and alowances (sales*.20)
Net sales (revenue to be recognized in 2012)

** Past four years returns have averaged 20%, 20% is shown to be a resonable estimate and should co

s (sales*.20)

9,000,000
1,800,000
7,200,000

estimate and should continue to be used.

Peace 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

Sales still available for return for six months
Actual returns on sales not returnable
2011 sales collected in 2012
2011 sales returned in 2012

$9,000,000
$2,000,000
21%
$2,500,000
19%

Installment sale
(a)
Installment accounts receivable
installment sales revenue

800,000

Cash

320,000

800,000

installment accounts receivables

Cost of installment sales

320,000
600,000

Inventory
repossessed merchandise
Deferred gross profit
loss on repossesion

.25*52,000
[26800-(52,000-13,000)]
installment accounts receivables

Rate of gross profit

600,000
26,800
13,000
12,200
52,000
200,000

(b)
deferred gross profit

80,000
Realized gross profit

80,000

Curiosity Company provided the following financial information for its installment-sales for
year.
Financial Data
Installment sales for current year
Cost of goods sold on installment basis
Payments by customers
Repossessed merchandise - unpaid balance
Repossessed merchandise - estimated valu
Required:

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

25%

ancial information for its installment-sales for the current

end of the year based on the information above.

$800,000
$600,000
$320,000
$52,000
$26,800