The construction company entered into a 3-year contract to build a bridge. The required contract price is P5,600,00. The following cost data relate to the construction activities: Cost to date Estimated cost to complete Progress billings each year Collections of billing each year 20x1 P1,512,000 3,528,000 2,240,000 1,960,000 20x2 4,032,000 448,000 2,240,000 2,240,000 20x3 4,536,000 1,120,000 1,400,000 The company uses cost to cost percentages in measuring progress to satisfying a performance obligation. Required: 1. Calculate revenue, cost and gross profit recognized each year-end 2. Determine the balance sheet presentation this contract at end of 20x1 and 20x2 3. Prepare all journal entries each year

The construction company entered into a 3-year contract to build a bridge. The required contract price is P5,600,00. The following cost data relate to the construction activities: Cost to date Estimated cost to complete Progress billings each year Collections of billing each year 20x1 P1,512,000 3,528,000 2,240,000 1,960,000 20x2 4,032,000 448,000 2,240,000 2,240,000 20x3 4,536,000 1,120,000 1,400,000 The company uses cost to cost percentages in measuring progress to satisfying a performance obligation. Required: 1. Calculate revenue, cost and gross profit recognized each year-end 2. Determine the balance sheet presentation this contract at end of 20x1 and 20x2 3. Prepare all journal entries each year

SWFT Comprehensive Volume 2019

42nd Edition

ISBN:9780357233306

Author:Maloney

Publisher:Maloney

Chapter16: Accounting Periods And Methods

Section: Chapter Questions

Problem 40P

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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
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