Based on Exercise 18-33 During 2020, Blue Company started a construction job with a contract price of $1,580,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $383,800 $807,380 $1,070,000 Estimated costs to complete 626,200 298,620 -0- Billings to date 297,000 895,000 1,580,000 Collections to date 271,000 807,000 1,433,000 Instructions: 1. Complete a chart in Excel analyzing the above information showing revenue, the % of completion every year and the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. 2. Prepare all necessary journal entries for 2020, 2021, and 2022. 3. Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used

Based on Exercise 18-33 During 2020, Blue Company started a construction job with a contract price of $1,580,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $383,800 $807,380 $1,070,000 Estimated costs to complete 626,200 298,620 -0- Billings to date 297,000 895,000 1,580,000 Collections to date 271,000 807,000 1,433,000 Instructions: 1. Complete a chart in Excel analyzing the above information showing revenue, the % of completion every year and the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. 2. Prepare all necessary journal entries for 2020, 2021, and 2022. 3. Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 25E: Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and...

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On March 1, 2019, Elkhart enters into a new contract to build a specialized warehouse for 7 million. The promise to transfer the warehouse is determined to be a performance obligation. The contract states that if the warehouse is usable by November 30, 2019, Elkhart will receive a bonus of 600,000. For every week after November 30 that the warehouse is not usable, the bonus will decrease by 150,000. Elkhart provides the following completion schedule: Required: 1. Assume that Elkhart uses the expected value approach. What amount should Elkhart use for the transaction price? 2. Assume that Elkhart uses the most likely amount approach. What amount should Elkhart use for the transaction price? 3. Next Level What is the purpose of assessing whether a constraint on the variable consideration exists?
Self-Construction Olson Machine Company manufactures small and large milling machines. Selling prices of these machines range from 35,000 to 200,000. During the 5-month period from August 1, 2019, through December 31, 2019, Olson manufactured a milling machine for its own use. This machine was built as part of the regular production activities. The project required a large amount of time front planning and supervisory personnel, as well as that of some of the companys officers, because it was a more sophisticated type of machine than the regular production models. Throughout the 5-month period, Olson charged all costs directly associated with the construction of the machine to a special account entitled Asset Construction Account. An analysis of the charges to this account as of December 31, 2019, follows: Olson allocates factory overhead to normal production as a percent of direct labor dollars as follows: Olson uses a flat rate of 40% of direct labor dollars to allocate general and administrative overhead. During the machine testing period, a cutter head malfunctioned and did extensive damage to the machine table and one cutter housing. This damage was not anticipated and was the result of an error in the assembly operation. Although no additional raw materials were needed to make the machine operational after the accident, the following labor for rework was required: Olson has included all these labor charges in the asset construction account. In addition, it included in the account the repairs and maintenance charges of 1,340 that it incurred as a result of the malfunction. Required: 1. Compute, consistent with GAAP and common practice, the amount that Olson should capitalize for the milling machine as of December 31, 2019, when it declares the machine operational. 2. Next Level Identify the costs you included in Requirement 1 for which there are acceptable alternative procedures. Describe the alternative procedure(s) in each case.
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Koolman Construction Company began work on a contract in 2019. The contract price is 3,000,000, and the company determined that its performance obligation was satisfied over time. Other information relating to the contract is as follows: Required: 1. Compute the gross profit or loss recognized in 2019 and 2020. 2. Prepare the appropriate sections of the income statement and ending balance sheet for each year.
During 2020, Grouper Company started a construction job with a contract price of $1,590,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $370,000 $869,790 $1,080,000 Estimated costs to complete 630,000 231,210 –0– Billings to date 302,000 900,000 1,590,000 Collections to date 267,000 804,000 1,415,000 (a) Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount Gross profit recognized in 2021 $enter a dollar amount Gross profit recognized in 2022 $enter a dollar amount
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During 2020, Skysong Company started a construction job with a contract price of $1,620,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $383,800 $850,200 $1,074,000 Estimated costs to complete 626,200 239,800 –0– Billings to date 300,000 899,000 1,620,000 Collections to date 267,000 816,000 1,429,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 Gross profit recognized in 2021 Gross profit recognized in 2022 Prepare all necessary journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. For costs incurred use account Materials, Cash, Payables.) Compute the amount of gross…
During 2020, Grouper Company started a construction job with a contract price of $1,590,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $370,000 $869,790 $1,080,000 Estimated costs to complete 630,000 231,210 –0– Billings to date 302,000 900,000 1,590,000 Collections to date 267,000 804,000 1,415,000 (a) Correct answer iconYour answer is correct. Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount Gross profit recognized in 2021 $enter a dollar amount Gross profit recognized in 2022 $enter a dollar amount eTextbook and Media List of Accounts Attempts: 1 of 3 used (b) Prepare all necessary journal entries for 2021. (Credit…
During 2020, Pearl Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $393,900 $760,380 $1,059,000 Estimated costs to complete 616,100 341,620 –0– Billings to date 299,000 905,000 1,610,000 Collections to date 268,000 818,000 1,421,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount Gross profit recognized in 2021 $enter a dollar amount Gross profit recognized in 2022 $enter a dollar amount
During 2020, Pearl Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $393,900 $760,380 $1,059,000 Estimated costs to complete 616,100 341,620 –0– Billings to date 299,000 905,000 1,610,000 Collections to date 268,000 818,000 1,421,000 Compute the amount of gross profit to be recognized each year, assuming the completed-contract method is used. 2020 2021 2022 Gross profit $enter a dollar amount $enter a dollar amount $enter a dollar amount
During 2020, Pearl Company started a construction job with a contract price of $1,610,000. The job was completed in 2022. The following information is available. 2020 2021 2022 Costs incurred to date $393,900 $760,380 $1,059,000 Estimated costs to complete 616,100 341,620 –0– Billings to date 299,000 905,000 1,610,000 Collections to date 268,000 818,000 1,421,000 Compute the amount of gross profit to be recognized each year, assuming the percentage-of-completion method is used. Gross profit recognized in 2020 $enter a dollar amount Gross profit recognized in 2021 $enter a dollar amount Gross profit recognized in 2022 $enter a dollar amount eTextbook and Media List of Accounts Prepare all necessary journal entries for 2021. (Credit account titles are automatically indented when amount is entered. Do not…