Chapter 5 Homework
Download this document and complete the homework questions. Then turn the completed homework
file in through Brightspace. Show your work where appropriate when answering the questions. This
assignment is due by Saturday at 11:59 PM CT of the assigned week.
1. A construction company expends $500,000 for work performed under a contract with a total
contract price of $3 million and estimated costs of $2.5 million. It sends a bill to the customer
for $400,000 under the terms of the contract.
a. How much revenue and gross profit should the company recognize in the income
statement?
b. How is the $400,000 billing reported on the balance sheet?
2. Estimating Uncollectible Accounts and Reporting Accounts Receivable: Collins Company
analyzes its accounts receivable at December 31 and arrives at the age categories below along
with the percentages that are estimated as uncollectible. The balance of the allowance for
uncollectible accounts is $1,100 on December 31, before any adjustments.
Age Group Accounts Receivable Estimated Loss %
0-30 Days Past Due $110,000 1%
31-60 Days Past Due $40,000 2%
61-120 Days Past Due $27,000 5%
121-180 Days Past Due $14,000 10%
Over 180 Days Past Due $9,000 25%
Total A/R $200,000
a. What amount of bad debt expense will Collins reports in its income statement for the
year?
b. Use the financial statement effects template to record Collins' bad debt expense for the
year.
c. What is the balance of accounts receivable on its December 31 balance sheet?
d. What is the amount (as a %) of estimated uncollectible receivables?
