Question 2 On the 1 March 20x1 Interface Unit started working on a contract with a contract price of R125 000.00. The following details regarding this contract were extracted from the records on 31 December 20x1 Details Material purchased for the contract R31 862.50 Wages paid R35 480.00 Other direct contract expenses R2 657.50 Plant purchased for the contract on 1 R28 437.50 March 20x1 Progress payments received from the R91 350.00 client The following additional information was made available: • The amount received from the client represents the value of all work certified less 15% retention money. • When the financial statement for 20x1 were prepared it was estimated that the contract would be completed by 30 January 20x2 and that the plant would have a market value of R8 075.00 on that date. It was estimated that further expenditure on the contract would amount to R18 200.00 • The company has a policy to take, in the financial statements, as part of the estimated total profit on each incomplete contract adjusted for the proportion between the progress payments made to date and the total contract price

Question 2 On the 1 March 20x1 Interface Unit started working on a contract with a contract price of R125 000.00. The following details regarding this contract were extracted from the records on 31 December 20x1 Details Material purchased for the contract R31 862.50 Wages paid R35 480.00 Other direct contract expenses R2 657.50 Plant purchased for the contract on 1 R28 437.50 March 20x1 Progress payments received from the R91 350.00 client The following additional information was made available: • The amount received from the client represents the value of all work certified less 15% retention money. • When the financial statement for 20x1 were prepared it was estimated that the contract would be completed by 30 January 20x2 and that the plant would have a market value of R8 075.00 on that date. It was estimated that further expenditure on the contract would amount to R18 200.00 • The company has a policy to take, in the financial statements, as part of the estimated total profit on each incomplete contract adjusted for the proportion between the progress payments made to date and the total contract price

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In 20x1, XYZ Company enters into a construction contract with a customer. The contract price is P10,000,000.Information on the contract follows:20X1 20X2 20X3Contract costs incurred during the year P2,645,132 P236,451 P2,657,000Estimated costs to complete 2,697,451 2,116,777 -Progress Billings 5,000,000 3,000,000 2,000,000Collections on progress billings 2,000,000 4,000,000 4,000,000 Using the cost-to-cost method, Note: Use up to two (2) decimal places in presenting the answer for percentage of completion. Use six (6)decimal places when applying the percentage.1. Percentage of completion for 20x1 _____________2. Revenue that should be recognized in 20x1 _____________3. Realized gross profit in 20x1 _____________4. Balance of "Contract Liability" at the end of 20x1 _____________
In 20x1, XYZ Company enters into a construction contract with a customer. The contract price is P10,000,000.Information on the contract follows:20X1 20X2 20X3Contract costs incurred during the year P2,645,132 P236,451 P2,657,000Estimated costs to complete 2,697,451 2,116,777 -Progress Billings 5,000,000 3,000,000 2,000,000Collections on progress billings 2,000,000 4,000,000 4,000,000Using the cost-to-cost method, compute the following: Note: Use up to two (2) decimal places in presenting the answer for percentage of completion. Use six (6)decimal places when applying the percentage.7. Realized gross profit in 20x2 _____________8. The balance of "Contract Liability" at the end of 20x2 _____________9. Revenue that should be recognized in 20x3 _____________10. Realized gross profit in 20x3
In 20x1, XYZ Company enters into a construction contract with a customer. The contract price is P10,000,000.Information on the contract follows:20X1 20X2 20X3Contract costs incurred during the year P2,645,132 P236,451 P2,657,000Estimated costs to complete 2,697,451 2,116,777 -Progress Billings 5,000,000 3,000,000 2,000,000Collections on progress billings 2,000,000 4,000,000 4,000,000 Using the cost-to-cost method, compute the following: Note: Use up to two (2) decimal places in presenting the answer for percentage of completion. Use six (6)decimal places when applying the percentage.4. Balance of "Contract Liability" at the end of 20x1 _____________5. Percentage of completion for 20x2 _____________6. Revenue that should be recognized in 20x2 _____________
QUESTION FOUR A construction company is currently undertaking three separate contracts and information relating to these contracts for the previous year, together with other relevant data, is shown below. Construction services Contract Contract Contract dept MNO PQR STU overhead (000) (000) (000) (000s) Contract price 800 675 1100 Balances brought forward at beginning of year: Cost of work completed — 190 370 — Material on site — — 25 — Written-down value of plant and machinery — 35 170 12 Wages accrued — 2 — — Profit previously transferred to…
1. In 20x1, Electrified Construction Co. enters into a contract to construct a building for a customer. Electrified identifies its performance obligation to be satisfied over time. Electrified measures its progress on the contract based on costs incurred. The contract price is P20M. Electrified has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is as follows: 20x1 20x2 20x3 a. contract cost incurred per yr. 8,160,000 7,320,000 1,920,000 b. billings per year 10,000,000 7,000,000 3,000,000 c. collections on billings per year 9,500,000 6,650,000 3,850,000 d. estimated costs to complete 8,840,000 1,720,000 (at each yr. end) a. Compute for the gross profits, revenues and costs of construction in 20x1, 20x2 and 20x3, respectively. b. Provide the journal entries under (i) traditional accounting and (ii) PFRS…
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In 20x1, Devin Co. enters into a contract to construct a building for a customer. Devin Co. identifies its peromance obligation to be satisfied over time. Devin CO. measures its progress on the contract based on ccosts incurred. The contract price is P10M. Devin has an unconditional right to all billings made in accordance with the billing schedule stated in the contract. Information on the construction is provided below: 20x1 20x2 20x3 a. Contract costs incurred to date 3,150,000 5,680,000 7,120,000 b. Biliings per year 4,000,000 5,000,000 1,000,000 c. Collections on billings per year 3,600,000 4,500,000 1,900,000 Requirements: a. Compute for the gross profits, revenues and costs of construction in 20x1, 20x2, 20x3, respectively. b. Provide the journal entries under (i) traditional accounting and (ii) PFRS 15. c.…
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