12.Zurich Corporation sells cases of champagne to customers for $200 a case. Each customer pays $40 when the case is picked up and then $40 a month for the next four months. The cost of a case of champagne is $60. Although the payment plan has significantly increased sales, Zurich has decided to delay the recognition of revenue until cash is received because of the questionable credit history of the new customers. During January, 2010, 10 cases of champagne were sold and the initial payment of $40 per case was collected. The normal first payment of $40 a case was collected on February 1, 2010. List the four revenue recognition criteria and state how each criterion is either met or not met based on the information provided.
13.During 2009 and 2010, Orange Company recognized $100,000 and $120,000 of sales, respectively. The inflation rate between 2009 and 2010 was 10 percent. Did sales increase 20 percent from 2009 to 2010? Explain.
14.Victor Corporation purchased a packaging machine on January 1, 2010 for $10,000. The machine is expected to be used for 3 years, and the company believes an equal portion of the cost should be allocated to each accounting period. How much expense should Victor recognize during 2010? What concept is illustrated?
15.On January 27, 2010, Lock Company entered into a three-year agreement with Strong Enterprises to supply 2,000 ounces of platinum for $200 an ounce. During 2010, Lock mined and purified the 2,000 ounces of platinum at a cost of $200,000. The platinum was shipped on January 14, 2011 and arrived on January 15, 2011, at Strong’s warehouse. What is Lock’s revenue and gross profit recognized during 2010, consistent with the criteria for revenue recognition and the matching concept? Explain.
16.During 1995, Jeter Company purchased property for its plant for $100,000. During December of 2010, a similar neighboring plot of land was sold for $120,000. At what amount would land be measured on Jeter Company’s December 31, 2010 balance sheet?