【正文】 nificant risks that are retained by the seller (risk of not being able to sell the product, for example). There are also measurement risks (knowing the selling price) that exist prior to the sale. The percentageofpletion method of revenue used for some longterm construction contracts would seem to most closely recognize revenue as the work is performed. As mentioned in Part 1, we are able to recognize revenue on this basis since a contract exists which mits the purchaser to buy the project (assuming certain conditions are met) and the sales price is known because of the existence of the contract.4. If all revenue is recognized when a student registers for the course, profit for 2007 would be:Sales Revenue1:Manuals and initial lessons (200 $100) $ 20,000Additional lessons ((200 8) $30) 48,000Examinations ((200 80%) $130) 20,800Total sales revenue 88,800Cost of sales:Manuals and initial lessons (200 ($15 + $3)) 3,600Additional lessons ((200 8) $3)) 4,800Examinations ((200 80%) $30) 4,800Total cost of sales 13,200Depreciation of development costs:$180,000 (200/1,000) 36,000Profit $ 39,6005. FINISH ENTERPRISESIne Statementfor the year ending December 31, 2005Continuing operations (excluding the chemical division)Sales ($35,000,000 – $5,500,000) $ 29,500,000Cost of sales ($15,000,000 – $2,800,000) (12,200,000)Gross profit 17,300,000Selling amp。9: Dr: Tax expense 25,500 Deferred ine tax 600 Cr: Ine tax payable 26,100(3) 20180。 (d) secondyear depreciation = (114,000 – 5,700) * 4/15 = 28,880.2. (a) weightedaverage accumulated expenditures (2008) = 75,000 * 12/12 + 84,000 * 9/12 + 180,000 * 8/12 + 300,000 * 7/12 + 100,000 * 6/12 = 483,000 (b) interest capitalized during 2008 = 60,000 * 12% + ( 483,000 – 60,000) * 10% =49,5003. (1) depreciation expense = 30,000 (2) book value = 600,000 – 30,000 * 2=540,000 (3) depreciation expense = ( 600,000 – 30,000 * 8)/16 =22,500 (4) book value = 600,000 – 30,000 * 8 – 22,500 = 337,5004. Situation 1: Jan 1st, 2008 Investment in M 260,000 Cash 260,000 June 30 Cash 6000 Dividend revenue 6000Situation 2:January 1, 2008 Investment in S 81,000 Cash 81,000June 15 Cash 10,800 Investment in S 10,800December 31 Investment in S 25,500 Investment Revenue 25,5005. a. December 31, 2008 Investment in K 1,200,000 Cash 1,200,000 June 30, 2009 Dividend Receivable 42,500 Dividend Revenue 42,500 December 31, 2009 Cash 42,500 Dividend Receivable 42,500 b. December 31, 2008 Investment in K 1,200,000 Cash 1,200,000 December 31, 2009 Cash 42,500 Investment in K 42,500 Investment in K 146,000 Investment revenue 146,000c. In a, the investment amount is 1,200,000 net ine reposed is 42,500 In b, the investment amount is 1,303,500 Net ine reposed is 146,000Chapter 51. a. June 1: Dr: Inventory 198,000 Cr: Accounts Payable 198,000June 11: Dr: Accounts Payable 198,000 Cr: Notes Payable 198,000June 12: Dr: Cash 300,000 Cr: Notes Payable 300,000b. Dr: Interest Expenses (for notes on June 11) 12,100 Cr: Interest Payable 12,100Dr: Interest Expenses (for notes on June 12) 8,175 Cr: Interest Payable 8,175c. Balance sheet presentation:Notes Payable 498,000Accrued Interest on Notes Payable 20,275d. For Green:Dr: Notes Payable 198,000Interest Payable 12,100Interest Expense 7,700 Cr: Cash 217,800For Western:Dr: Notes Payable 300,000Interest Payable 8,175Interest Expense 18,825 Cr: Cash 327,0002. (1) 20180。Suggested SolutionChapter 11. Effect on the accounting equation(1)(2)(3)(4)(5)(6)(a) Increase in one asset, decrease in another asset.√(b) Increase in an asset, increase in a liability.(c) Increase in an asset, increase in capital.√√(d) Decrease in an asset, decrease in a liability.√(e) Decrease in an asset, decrease in capital.√√2. TransactionsAssets+/Liabilities+/Owner’s equity+/1++2++34++5++6