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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.In 2018, Long Construction Corporation began construction work under a three-year contract. The contract priceis $1,600,000. Long recognizes revenue over time according to percentage of completion for financial reportingpurposes. The financial statement presentation relating to this contract at December 31, 2018, is as follows:Balance SheetAccounts receivable (from construction progress billings) $30,000Construction in progress $100,000 Less: Billings on construction contract (94,000)Cost and profit of uncompleted contracts in excess of billings 6,000Income StatementIncome (before tax) on the contract recognized in 2018 $20,000Required:1. What was the cost of construction actually incurred in 2018?On January 1, 2018, Sansa Construction entered into a contract amounting to P10,000,000 to construct a building. The engineers of the company estimated that on December 31, 2018, the building was 75% completed. If the expected gross profit rate from the contract is 15%, what is the reportable income of the company in 2018 under the percentage of completion method? a. P1,125,000 b. P1,500,000 c. P7,500,000 d. P10,000,000 e. Answer not given
- A Company has used the cost-to-cost-completion (over time) method of recognizing revenue. The following information regarding a recently completed building project for which the total contract price was P2,000,000. Description 2018 2019 2020 Gross profit (loss) P40,000 P140,000 P(20,000) Costs incurred each year 360,000 ? 820,000 How much was the cost incurred in 2019?SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2017 December 31, 2018Percentage of completion 30% 82.5%Estimated cost to complete 1,960,000 840,000 1. What is the total cost incurred in year 2018?A. 4,073,750 C. 1,680,000B. 840,000 D. 3,120,000 2. The realized gross profit (loss) in year 2018 isA. 650,000 C. (. 245,000)B. 405,000 D. (1,055,000) 3. What is the construction cost of sales for year 2018?A. 3,960,000 C. 3,233,750B. 3,120,000 D. 4,478,750 4. What is the construction-in-progress as of 2018?A. 3,423,750 C. 2,065,000B. 3,310,000 D. 2,470,000Pharoah Construction entered into a contract to construct a bridge for a contract price of $2.95 million. Construction began in 2019 and was completed in 2021. Below are the details of the transactions related to the contract: 2019 2020 2021 Costs incurred during the year $649,000 $836,000 $693,900 Estimated costs to complete 1,427,800 515,000 0 Calculate the revenue, expenses and gross profit to be recognized each year using the percentage-of-completion method. (Round the percentage completion to 2 decimal places, e.g. 52.75% and other answers to 0 decimal places, e.g. 1,525.) 2019 2020 2021 Revenue $ $ $ Expenses Gross Profit $ $ $
- Hamilton Construction Company uses the percentage-of-completion method of accounting. In 2020, Hamilton began work under contract #E2-D2, which provided for a contract price of $2,200,000. Other details follow: 2020 2021 Costs incurred during the year $640,000 $1,425,000 Estimated costs to complete, as of December 31 960,000 –0– Billings during the year 420,000 1,680,000 Collections during the year 350,000 1,500,000 Instructions a. What portion of the total contract price would be recognized as revenue in 2020? In 2021? b. Assuming the same facts as those above except that Hamilton uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2021? c. Prepare a complete set of journal entries for 2020 (using the percentage-of-completion method).E12. WEIS Construction Company uses the percentage-of-completion method of accounting. In 2020, WEIS began work under contract #E2-D2, which provided for a contract price of $2,187,000. Other details follow: 2020 2021 Costs incurred during the year $658,560 $1,408,000 Estimated costs to complete, as of December 31 909,440 –0– Billings during the year 421,000 2,187,000 Collections during the year 348,000 1,527,000 (a) What portion of the total contract price would be recognized as revenue in 2020? In 2021? Revenue recognized in 2020 $ Revenue recognized in 2021 $ (b) using the information above, but assuming the company uses the completed-contract method of accounting, what portion of the total contract price would be recognized? Revenue recognized in 2020 $ Revenue recognized in 2021 $E12. WEIS Construction Company uses the percentage-of-completion method of accounting. In 2020, WEIS began work under contract #E2-D2, which provided for a contract price of $2,187,000. Other details follow: 2020 2021 Costs incurred during the year $658,560 $1,408,000 Estimated costs to complete, as of December 31 909,440 –0– Billings during the year 421,000 2,187,000 Collections during the year 348,000 1,527,000 (a) What portion of the total contract price would be recognized as revenue in 2020? In 2021? Revenue recognized in 2020 $ 918,540 Revenue recognized in 2021 $ 1,268,460 (b) using the information above, but assuming the company uses the completed-contract method of accounting, what portion of the total contract price would be recognized? Revenue recognized in 2020 $ 0 Revenue recognized in 2021 $ 2,187,000 (c)Prepare a complete set of journal entries for 2020 (using the…
- Marigold Construction Company uses the percentage-of-completion method of accounting. In 2020, Marigold began work under contract #E2-D2, which provided for a contract price of $2,234,000. Other details follow: 2020 2021 Costs incurred during the year $615,980 $1,420,000 Estimated costs to complete, as of December 31 1,005,020 –0– Billings during the year 413,000 2,234,000 Collections during the year 351,000 1,530,000 What portion of the total contract price would be recognized as revenue in 2020? In 2021? Revenue recognized in 2020 $ Revenue recognized in 2021 $ SHOW LIST OF ACCOUNTS LINK TO TEXT Assuming the same facts as those above except that Marigold uses the completed-contract method of accounting, what portion of the total contract price would be recognized as revenue in 2021? Revenue…SMC entered into a long-term construction contract for 3 years. Contract price agreed was P4,150,000. The outcome of the contract was estimated reliably. The following data were ascertained for the contract: December 31, 2017 December 31, 2018Percentage of completion 30% 82.5%Estimated cost to complete 1,960,000 840,000 What is the construction cost of sales for year 2018?A. 3,960,000 C. 3,233,750B. 3,120,000 D. 4,478,750Santiago builders began construction work in 2021 for a project with contract price of P24,000,000. Santiago Builders uses percentage of completion. The financial statements for 2021 relating to the contract show the following: Accounts receivable. P 1,500,000 Construction in progress. 4,800,000 Contract billings to date. 4,500,000 Realized gross profit in 2021. 600,000 1.Compute the total cost incurred to date A.4,200,000. C. 5,400,000 B.4,800,000. D. 5,100,000 2.Compute the cash collection during 2021 A.3,000,000. C. 2,100,000 B.4,200,000. D. 3,900,000
