The contract Ledger of Alphas Co. revealed the following expenditure an account acontract on 31 Dec. 2012MaterialsPlaniWagesExpensesEstablishment charges2.93,00015,00010,000The contract was started on 19 Jan, 12 and the contract price was 10,00,000. Cash received todate was 4,60.000 representing 80% of the work certified the remaining 20s being ratained untilcompletion. The value of plant on 31 Dec 2012 was 20.000 and the value of material on hand was6.000. The cost of work finished but NDT DER e cn the said date was 50,000.Some of the materials. costing 20,000 were found unsuitable and were sold For 16,000 and apart of the plant costing & 5.000 unsuited to the contract was sold at a profil of 1,000.In order to calculate the profit made on the contract to 31st Dec 12, the contractors estimatedfurther expenditure that would be incurred in completing the contract and took to the credit of profit andLoss Account for the year that proportion of the estimated net profil to be realised on the contract whichthe value of work certified bare to the, contract price.The estimates were as under :(a) that the contract would be completed by 30th June 13(b) then a further sum of 30,000 would have to bo spent on plant and the residual value of the plant2,10,00070.000on the completion of the contract would12,000.(s) The materials in addition to those on hand on 31 Dec 2012, would cost € 1,00,000 and that furtherCundry expenses of 7,000 would be incurred.(d) That the wagors on the contract for the six months to June 2013, would emount to 1,69,900.(e) That the establishmont charges would cord the same amount per march as in the previous year.(1) Thot 18.000 would bo sufficiont to meet the contingencies.Prepare the contract account for the year onded 31 Dec 2012 and show your calculations of the profilto be ciod tod to profil and Loss Account of the vam

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Answered: The contract Ledger of Alphas Co.…

Financial Accounting Intro Concepts Meth/Uses

14th Edition

ISBN:9781285595047

Author:Weil

Publisher:Weil

Chapter8: Revenue Recognition, Receivables, And Advances From Customers

Section: Chapter Questions

Problem 48P

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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?
In 20x1, Metallica Co. enters into a construction contract with a customer. The transaction price in the contract is ₱1,200,000. At contract inception, Metallica Co. estimates a total contract cost of ₱944,000. The actual costs incurred in 20x1 are ₱590,000. The estimated cost to complete on December 31, 20x1 is ₱410,000. Progress billings during the year amount to ₱70,000, ₱60,000 of which is collected. At contract inception, Metallica Co. determines that its performance obligation in the contract is a single performance obligation that is satisfied over time. Metallica Co. uses the cost-to-cost method to measure its progress in the contract. How much is the profit recognized in 20x1? a. 118,000 c. 122,000 b. 120,800 d. 132,200
You were engaged to audit the books of accounts of A. Bonifacio contractors which had a 3 year construction contract in 2020 for Php 900,000. A Bonifacio uses the percentage of completion method for financial statement purposes. Income to be recognized each year is based on the ratio of cost incurred to total estimated cost to complete the contract. Data on this contract follows: Accounts receivable construction contract billings Php 30,000 Construction in progress 93,750 Less: Amounts billed 84,375 10% retention Php 9,375 Net Income recognized in 2020 (before tax) Php 15,000 A. Bonifacio contractors maintains a separate bank account for each construction contract. Bank deposits to this contract amounted to Php 50,000 Required: 6. How much cash was collected on the contract that was not yet deposited as at December 31, 2020? Thank you
Bella has a three-year contract which commenced on 1 January 2020. As at 31 December 2020 Bella extracted the following balances from its ledger relating to the contract: RM’000 RM’000 Total contract value 140,000 Cost incurred up to 31 December 2019: Attributable to work completed 52,000 Inventory purchased for use in future years 8,000 60,000 Progress billing to date 45,000 Cash received 26,500 Other information: Expected further costs to completion 48,000 As at 31 December 2020, the contract was certified as 40% complete. Required: Prepare extracts from the statement of profit or loss and statement of financial position for the year- ended 31 December 2020.
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. 2,470,000
On January 31, O’Malley Company contracted to have two products built by Taylor Manufacturing for a total of P185,000. The contract specifies that payment will only occur after both products have been transferred to O’Malley Company. O’Malley determines that the standalone prices areP100,000 for Product 1 and P85,000 for Product 2. On August 1, when Product1 has been transferred, the journal entry to record this event include a:a. Debit to Contract Assets for P85,000b. Debit to Contract Assets for P100,000 explain your answer
The following details apply to a contract where performance obligations are satisfied over time at 31 December 20X5. $ Total contract revenue 120,000 Costs to date 48,000 Estimated costs to completion 48,000 Amounts invoiced 50,400 The contract is agreed to be 45% complete at 31 December 20X5. What amount should appear in the statement of financial as at 31 December 20X5 as a contract asset?
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. 4,478,750
J Contractors entered into a contract on October 2017 to build a warehouse for Francis Corporation. The total contract price amounting to P10,000,000 was received by Il upon completion on June 30, 2018. Materials purchased during construction valued at P4,000,000 were paid on June 1, 2018 while a construction equipment worth P3,000,000 (net of VAT) was purchased on January 1, 2018 with the following terms; down payment - 500,000, balance payable every January 1 until fully paid starting 2019. The equipment was estimated to last for 6 years. How much is the VAT payable of JJ for June 30, 2018? P360,000 P690,000 P684,000 P0
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: 2019 2020 Costs incurred during the year $600,000 $700,000 Estimated costs to complete, December 31 1,400,000 1,200,000 Billings during the year 500,000 850,000 Collections during the year 400,000 800,000 Required: 1. Compute the gross profit or loss recognized in 2019 and 2020. If there is a loss a minus sign must be entered. 2. Prepare the appropriate sections of the income statement for each year. If there is a loss a minus sign must be entered. 3. Prepare the appropriate sections of the ending balance sheet for the year 2019. 4. Prepare the appropriate sections of the ending balance sheet for 2020.
Duke Ltd has a contract with a customer ongoing at the end of the financial year, 31 December 2020. Details of this contract are as follows:Total contract price £50,000Cost incurred to date £12,000Anticipated future costs £28,000Progress billing - Agreed price for the component completed £14,000Progress is measured using the output method under IFRS 15 Revenue from Contracts with Customers.What amount of revenue is able to be recognised for the year ended 31December 2020?a) £15,000b) £50,000c) £21,000d) £14,000
In 2020, Grouper Construction Corp. began construction work under a 3-year contract. The contract price was $1,060,000. Grouper uses the percentage-of-completion method for financial accounting purposes. The income to be recognized each year is based on the proportion of cost incurred to total estimated costs for completing the contract. The financial statement presentations relating to this contract at December 31, 2020, are shown below. Balance Sheet Accounts receivable $17,700 Construction in process $68,300 Less: Billings 61,300 Costs and recognized profit in excess of billings 7,000 Income Statement Income (before tax) on the contract recognized in 2020 $16,392 (a) How much cash was collected in 2020 on this contract? Portion of contract billings collected $enter a dollar amount (b) What was the initial estimated total income before tax on this contract? Income before tax on this contract $enter a…

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