How much is the Gross Profit/Loss Realized in 2018?
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- Heart, Inc. consistently uses the percentage of completion method of recognizing income. During 2018, Heart started work on a P3,000,000 fixed price project. The accounting records disclosed the following data for the year ended December 31, 2018: Costs incurred, P930,000; Estimated cost to complete, P2,170,000; Progress billings, P1,100,000; Collections, P700,000. How much is the balance of Construction in Progress account in 2018?During 2016, Green Love Company started a construction work with a contract price of $4,500,000,000. The work was completed in 2018. The following information is available on picture below. (a) Compute the application of the percentage of completion method on a cost to cost basis. (b) Calculate the amount of revenue and gross profit to be recognized annually using the percentage of completion and cost-recovery methods.Archer Construction Company began work on a $420,000 construction contract in 2017. During 2017, Archer incurred costs of $278,000, billed its customer for $215,000, and collected $175,000. At December 31, 2017, the estimated additional costs to complete the project total $162,000. Prepare Archer’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method.
- During 2009, Mason Construction, Inc. started work on a P 5,200,000 fixed-price construction contract to be completed in two years. The accounting records disclosed the following data for the year ended December 31, 2009: Cost incurred P 2,650,000Estimated cost to complete 2,720,000Progress billings 2,500,000Collections 2,000,000What amount of net income or loss should have been recognized in 2009? On May 1, 2010, Jollibee Inc., a franchisor, entered into a franchise agreement with Session Delights, a franchisee. The total franchise fees agreed upon is P11,900,000 of which P5,000,000 is payable upon signing and the balance payable in three annual payments. It was agreed that the down-payment is nonrefundable, not withstanding the lack of substantial performance of services by franchisor. What amount of deferred revenue should be reported in the May 1, 2010 financial statements of Jollibee Inc.?The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method to estimated profits. A record of construction activities for the years 2017 to 2019 follows: 2017 2018 2019 Actual cost incurred to date P6,562,500 10,968,750 116,250,000 Esimated cost to complete 4,375,000 1,218,750 - Progress billings 3,000,000 12,000,000 13,125,000 Cash receipts during the year 5,625,000 3,750,000 3,750,000 Using percentage-of-completion method, compute for the following: 1. How much is the realized gross profit in 2017, 2018 and 2019? 2. How much is the Revenue earned in 2018? 3. How much is the CIP net in 2018? 4. How much is the CIP net in 2019? Using zero-profit method (cost recovery), compute for the following: 5. How much is…The ETHAN Construction company was the lowest bidder on a specialized equipment contract. The contract bid was P13,125,000 with an estimated cost to complete the project of P7,800,000. The contract period was 35 months beginning January 1, 2017. The company uses cost to cost method to estimated profits. A record of construction activities for the years 2017 to 2019 follows: 2017 2018 2019 Actual cost incurred to date P6,562,500 10,968,750 116,250,000 Esimated cost to complete 4,375,000 1,218,750 - Progress billings 3,000,000 12,000,000 13,125,000 Cash receipts during the year 5,625,000 3,750,000 3,750,000 (Cost Recovery) How much is the realized gross profit in 2017, 2018 and 2019? a. 656,250; (468,750); 1,312,500 b. 0; 0; 1,500,000 c. 1,312,500; 468,750; 656,250 d. 1,312,500; (468,750); 656,250
- DM, Inc. works on a P10,500,000 contract in 2015 to construct an office building. During 2015, DM, Inc. uses thecost to cost method. At December 31, 2015, the balances in certain accounts were: Construction in Progress – P3,780,000;Accounts Receivable – P360,000; and Billings on Construction in process – P1,800,000; contract retention – P180,000;Mobilization fee – P140,000. At December 31, 2015, the estimated cost at completion is P7,350,000. Determine the realizedgross profit in 2015In 2016, Omega Construction began work on a contract with a price of $850,000 and estimated costs of $595,000. Data for each year of the contract are as follows: 2016 2017 2018 Costs incurred during the year $238,000 $319,600 $105,000 Estimated costs to complete 357,000 139,400 -0- Partial billings 260,000 210,000 380,000 Collections 240,000 200,000 410,000 Refer to Exhibit 17-2. Assuming the performance obligation is satisfied over time, what would be the gross profit in 2016? $255,000 $260,000 $102,000 $425,000Shumpert, Inc. entered into a contract that was to take two years to complete, with an estimated cost of $2,257,600. The contract price was $3,160,640. Costs of the contract for 2014, the first year, totaled $1,693,200. a. What was the gross profit reported by the percentage of completion method for 2014?
- JC Construction, Inc. has consistently used the percentage of completion method of recognizing income. During 2018 JC started work on a P3,000,000 fixed price construction contract. The accounting records disclosed the following data for the year ended December 31, 2018: Cost incurred P930,000 Estimated Cost to Complete 2,170,000 Progress Billings 1,100,000 Collections 700,000 How much loss should JC have recognized in 2018On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to builda bridge for a price of $8,000,000. During 2018, costs of $2,000,000 were incurred, with estimated costs of$4,000,000 yet to be incurred. Billings of $2,500,000 were sent, and cash collected was $2,250,000.In 2019, costs incurred were $2,500,000 with remaining costs estimated to be $3,600,000. 2019 billings were$2,750,000, and $2,475,000 cash was collected. The project was completed in 2020 after additional costs of$3,800,000 were incurred. The company’s fiscal year-end is December 31. This project does not qualify for revenue recognition over time.Required:1. Calculate the amount of gross profit or loss to be recognized in each of the three years.2. Prepare journal entries for 2018 and 2019 to record the transactions described (credit “various accounts” forconstruction costs incurred).3. Prepare a partial balance sheet to show the presentation of the project as of December 31, 2018…On July 1, 2016, ABC Construction Corp. contracted to build an office building for XYZ, Inc. fora total price of P975,000. 2016 2017 2018Contract cost incurred to date 75,000 600,000 1,050,000Estimated costs to complete the contract 675,000 400,000 -Billings to XYZ, Inc. 150,000 550,000 275,0001. Under the percentage of completion method, how much is the Construction-in-Progressat December 31,2017?2. Under the zero-profit method, how much is the Construction-in-Progress, net of ProgressBillings at December 31, 2017?3. Under the percentage of completion method, how much is the realized gross profit/ (loss)at December 31, 2018?