Gupta Industries received a $300,000 prepayment from Packard Associates for the sale of new equipment. Gupta will bill Packard an additional $100,000 upon delivery of the equipment. Upon receipt of the $300,000 prepayment, how much should Gupta recognize for a contract asset, a contract liability, and accounts receivable? Multiple Choice O Contract asset: $0: contract liability: $300,000, accounts receivable, So Contract asset $300,000; contract liability: $0, accounts receivable, $0. Contract asset $0: contract liability: $300,000, accounts receivable, $100,000
Gupta Industries received a $300,000 prepayment from Packard Associates for the sale of new equipment. Gupta will bill Packard an additional $100,000 upon delivery of the equipment. Upon receipt of the $300,000 prepayment, how much should Gupta recognize for a contract asset, a contract liability, and accounts receivable? Multiple Choice O Contract asset: $0: contract liability: $300,000, accounts receivable, So Contract asset $300,000; contract liability: $0, accounts receivable, $0. Contract asset $0: contract liability: $300,000, accounts receivable, $100,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Gupta Industries received a $300,000 prepayment from Packard Associates for the sale of new equipment. Gupta will bill Packard an
additional $100,000 upon delivery of the equipment. Upon receipt of the $300,000 prepayment, how much should Gupta recognize for a
contract asset, a contract liability, and accounts receivable?
Multiple Choice
O
O
Contract asset: $0; contract liability: $300,000, accounts receivable. $0.
Contract asset: $300,000; contract liability: $0, accounts receivable, $0.
Contract asset: $0: contract liability: $300,000, accounts receivable, $100,000
Contract asset: $300,000; contract liability: $0, accounts receivable, $100,000
Transcribed Image Text:Reliable Enterprises sells distressed merchandise on extended credit terms. Collections on these sales are not reasonably assured, and bad
debt losses cannot be reasonably predicted. It is unlikely that repossessed merchandise is in condition to be re-sold. Therefore, Reliable uses
the cost recovery method. Merchandise costing $30,750 was sold for $58,500 in 2020. Collections on this sale were $21,300 in 2020, $15,200
in 2021, and $22,000 in 2022.
In 2022, Reliable would recognize gross profit of:
Multiple Choice
$10,000
O $4,500.
$0.
$22,000
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