WW Guy Contractors began a contract to build a new student union on the UNF campus during Year 1 for $455,000. Information concerning the project follows: Percentage of work completed Costs incurred during the year Progress billings during the year Cash collected during the year Year 1 25% Year 2 35% $86,000 $124,000 80,000 180,000 65,000 170,000 Year 3 40% $ 90,000 190,000 215,000 At the end of Year 1, how much is the balance of the assets account Production-in- Progress if WW Guy uses the percentage of completion method? A. $ 11,000 B. $ 75,000 C. $ 86,000 D. $113,750
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At the end of Year 1, how much is the balance of the assets account Production-in-Progress if WW Guy uses the percentage of completion method? see the options in attached screenshot.
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- Capital expenditures budget On August 1, 20Y4. the controller of Handy Dan Tools Inc. is planning capital expenditures for the years 20Y5-20Y8. The controller interviewed several Handy Dan executives to collect the necessary information for the capital expenditures budget. Excerpts of the interviews are as follows: Director of Facilities: A construction contract was signed in May 20Y4 for the construction of a new factory building at a contract cost of $9,000,000. The construction is scheduled to begin in 20Y5 and completed in 20Y6. Vice President of Manufacturing: Once the new factor)' building is finished, we plan to purchase $3-6 million in equipment in late 20Y6. I expect that an additional $500,000 will lx-needed early in the following year (20Y7) to test and install the equipment before we can begin production. If sales continue to grow, I expect we'll need to invest another half million in equipment in 20Y8. Vice President of Marketing: We have really been growing lately. I wouldn't be surprised if we need to expand the size of our new factory building in 20YS by at least 25%. Fortunately, we expect inflation to have minimal impact on construction costs over the next four years. Additionally, 1 would expect the cost of the expansion to Ik- proportional to the size of the expansion. Director of Information Systems: We need to upgrade our information systems to wireless network technology. It doesn't make sense to do this until after the new factory building is completed and producing product. During 20Y7, once the factor)' is up and running, we should equip the whole facility with wireless technology. I think it would cost us $400,000 today to install the technology. However, prices have been dropping by 10% per year, so it should be less expensive at a later date. President: I am excited about our long-term prospects. My only short-term concern is financing the $5,000,000 of construction costs on the portion of the new factor)' building scheduled to be completed in 20Y5. Use the interview information above to prepare a capital expenditures budget for Handy Dan Tools Inc. for the years 20Y5-20Y8.St. Johns Medical Center (SJMC) has five medical technicians who are responsible for conducting cardiac catheterization testing in SJMCs Cath Lab. Each technician is paid a salary of 36,000 and is capable of conducting 1,000 procedures per year. The cardiac catheterization equipment is one year old and was purchased for 250,000. It is expected to last five years. The equipments capacity is 25,000 procedures over its life. Depreciation is computed on a straight-line basis, with no salvage value expected. The reading of the catheterization results is conducted by an outside physician whose fee is 120 per test. The technicians report with the outside physicians note of results is sent to the referring physician. In addition to the salaries and equipment, SJMC spends 50,000 for supplies and other costs needed to operate the equipment (assuming 5,000 procedures are conducted). When SJMC purchased the equipment, it fully expected to perform 5,000 procedures per year. In fact, during its first year of operation, 5,000 procedures were run. However, a larger hospital has established a clinic in the city and will siphon off some of SJMCs business. During the coming years, SJMC expects to run only 4,200 cath procedures yearly. SJMC has been charging 850 for the procedureenough to cover the direct costs of the procedure plus an assignment of general overhead (e.g., depreciation on the hospital building, lighting and heating, and janitorial services). At the beginning of the second year, an HMO from a neighboring community approached SJMC and offered to send its clients to SJMC for cardiac catheterization provided that the charge per procedure would be 550. The HMO estimates that it can provide about 500 patients per year. The HMO has indicated that the arrangement is temporaryfor one year only. The HMO expects to have its own testing capabilities within one year. Required: 1. Classify the resources associated with the cardiac catheterization activity into one of the following: (1) committed resources, or (2) flexible resources. 2. Calculate the activity rate for the cardiac catheterization activity. Break the activity rate into fixed and variable components. Now, classify each activity resource as relevant or irrelevant with respect to the following alternatives: (1) accept the HMO offer, or (2) reject the HMO offer. Explain your reasoning. 3. Assume that SJMC will accept the HMO offer if it reduces the hospitals operating costs. Should the HMO offer be accepted? 4. Jerold Bosserman, SJMCs hospital controller, argued against accepting the HMOs offer. Instead, he argued that the hospital should be increasing the charge per procedure rather than accepting business that doesnt even cover full costs. He also was concerned about local physician reaction if word got out that the HMO was receiving procedures for 550. Discuss the merits of Jerolds position. Include in your discussion an assessment of the price increase that would be needed if the objective is to maintain total revenues from cardiac catheterizations experienced in the first year of operation. 5. Chandra Denton, SJMCs administrator, has been informed that one of the Cath Lab technicians is leaving for an opportunity at a larger hospital. She met with the other technicians, and they agreed to increase their hours to pick up the slack so that SJMC wont need to hire another technician. By working a couple hours extra every week, each remaining technician can perform 1,050 procedures per year. They agreed to do this for an increase in salary of 2,000 per year. How does this outcome affect the analysis of the HMO offer? 6. Assuming that SJMC wants to bring in the same revenues earned in the cardiac catheterization activitys first year less the reduction in resource spending attributable to using only four technicians, how much must SJMC charge for a procedure?Brooksville Construction began a construction project in 20x5. The contract price was P1,250,000, and the estimated costs were P1,000,000. Data for each year of the contract are as follows: 20x5 20x6 20x7 Costs incurred during the year P 250,000 P 600,000 P 190,000 Estimated costs to complete 750,000 212,500 -0- Partial billings 375,000 500,000 375,000 Collections 187,500 469,000 593,500 Assuming Brooksville uses the percentage-of-completion method of revenue recognition, determine: What is the balance of Construction in Progress at the end of 20x5.
- Dexter Construction Corporation is building a student condominium complex; it started construction on January 1, Year 1. Dexter borrowed $1 million specifically for the project by issuing a 10%, 5-year, $1 million note, which is payable on December 31 of Year 3. Dexter also had a 12%, 5-year, $3 million note payable and a 10%, 10-year, $1.8 million note payable outstanding all year. In Year 1, Dexter incurred costs as follows: January 1 $300,000 March 1 600,000 June 30 1,000,000 November 1 480,000 Calculate Dexter's capitalized interest on the student condominium complex for Year 1.Dominion construction is awarded a contract to build a commercial building. The contract price is $1,500,000 and during the first month of the job, the following transactions occurred: Cash expenditures to date $300,000 Total expenditures to date $350,000 Estimated expenditure to complete $1,100,000 Total estimated expenditures $1,450,000 Billing to date $280,000 Cash collected to date $250,000 What is "Revenue to Date" in Cash Method? 350000 280000 250000 300000Tamarisk Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $1,980,000 on March 1, $1,260,000 on June 1, and $3,040,930 on December 31. Tamarisk Company borrowed $1,078,330 on March 1 on a 5-year, 12% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,012,400 note payable and an 10%, 4-year, $3,382,000 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.) Weighted-average interest rate: %
- A construction company entered into a fixed-price contract to build a soccer stadium for $15,000,000. Construction costs incurred during the first year were $3,675,000, and estimated costs to complete at the end of the year were $6,825,000. The company recognizes revenue over time according to percentage of completion. Fixed-price contract amount: $15,000,000 Construction costs incurred in first year: $3,675,000 Estimated costs to complete at end of first year: $6,825,000 How much revenue and gross profit or loss will appear in the company’s income statement in the first year of the contract? Percentage of completion at end of first year Revenue Gross profit (loss) Nothing in this area will be graded, but it will be submitted with your assignment.SMDC Construction signed a contract to build a building over a period 3 years for a price of P10,000,000. Information relating to the performance of the contract is summarized as follows: 2017 2018 2019 contribution costs incurred during the year 2,500,000 2,400,000 1,800,000 estimated costs to complete 4,500,000 1,800,000 - buildings during the year 2,200,000 2,800,000 5,000,000 collections during the year 2,000,000 2,500,000 5,500,000 Prepare the entries under the percentage of completion.Blossom Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $2,016,000 on March 1, $1,296,000 on June 1, and $3,041,650 on December 31.Blossom Company borrowed $1,115,400 on March 1 on a 5-year, 13% note to help finance construction of the building. In addition, the company had outstanding all year a 9%, 5-year, $2,469,300 note payable and an 10%, 4-year, $3,155,500 note payable. Compute the weighted-average interest rate used for interest capitalization purposes. (Round answer to 2 decimal places, e.g. 7.58%.)
- CN started a three-year contract to build a new university campus on 1 April 20X4. The contract had a fixed price of $90 million. CN will satisfy the performance obligation over time. CN incurred costs to 31 March 20X5 of $77 million and estimated that a further $33 million would need to be spent to complete the contract. CN measures the progress of contracts using work completed compared to contract price. At 31 March 20X5, a surveyor valued the work completed to date at $63 million. Select the correct amounts to be shown in revenue and cost of sales in the statement of profit or loss for the year ended 31 March 20X5? Revenue Cost of sales $63 million $77 million $57 million $83 millionConstruction Corporation has a contract to construct a building for $10,950,000. The building is controlled by the customer throughout the term of the contract. Total costs to complete the building were originally estimated at $8,850,000. Construction commenced on 4 February 20×5. Actual costs were in line with estimated costs for 20×5 and 20×6. In 20×7, actual costs exceeded estimated costs by $150,000.Total construction costs incurred in each year were as follows:20X5: $2,700,00020X6: $4,500,00020X7: $1,800,000Progress billings based on the amount of work completed were collected each year. Star Construction uses the percentage-of-completion method. The percentage-of-completion is based on costs incurred compared with estimated total costs of the project.Company also billed the client and collected the following paymentsYear Billings Payments Received20X5: $2,300,000 $2,100,00020X6: $4,900,000 $4,700,00020X7: $3,750,000 $4,150,000Required: Calculate Net income for the construction…Whispering Company is constructing a building. Construction began on February 1 and was completed on December 31. Expenditures were $5,400,000 on March 1, $3,600,000 on June 1, and $9,000,000 on December 31.Whispering Company borrowed $3,000,000 on March 1 on a 5-year, 10% note to help finance construction of the building. In addition, the company had outstanding all year a 12%, 5-year, $6,000,000 note payable and an 11%, 4-year, $10,500,000 note payable. Compute avoidable interest for Whispering Company. Use the weighted-average interest rate for interest capitalization purposes