Explanation Gross profit in 2017 $240,000 Gross profit in 2018 $135,000 Gross profit in 2019 $155,000 Formula: 2017 2018 2019 Contract price $1,600,000 $1,600,000 $1,600,000 Costs: Costs to date $400,000 $825,000 $1,070,000 Estimated costs to complete 600,000 1,000,000 275,000 1,100,000 0 1,070,000 Total estimated profit 600,000 500,000 530,000 Percentage completed to date X 40% * X 75% ** X 100% Total gross profit recognized 240,000 To determine (b) To prepare: To prepare journal entries. Given information: All the information related to N Company is provided in the question document. To determine (c) To determine the amount of gross profit to be recognized each year. Given information: All the information related to N Company is provided in the question document.

Intermediate Accounting, Binder Ready Version

16th Edition

ISBN: 9781118742976

Author: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield

Publisher: WILEY

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Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required…

Question

Chapter 18, Problem 32E

To determine

Percentage-of-completion method: The percentage-of-completion method is the method which indicates the income and the expenses for longer term contracts which are recorded as and when the percentage of the work is completed.

Completed contract method: In this method the revenue and profit are recognized only after the completion of the contract.

(a)

To determine the amount of gross profit.

Given information: All the information related to N Company is provided in the question document.

To determine

(b)

To prepare: To prepare journal entries.

Given information: All the information related to N Company is provided in the question document.

To determine

(c)

To determine the amount of gross profit to be recognized each year.

Given information: All the information related to N Company is provided in the question document.

Expert Solution & Answer

Chapter 18 Solutions

Intermediate Accounting, Binder Ready Version

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Ch. 18 - Prob. 11Q Ch. 18 - Prob. 12Q Ch. 18 - Prob. 13Q Ch. 18 - Prob. 14Q Ch. 18 - Prob. 15Q Ch. 18 - Prob. 16Q Ch. 18 - Prob. 17Q Ch. 18 - Prob. 18Q Ch. 18 - Prob. 19Q Ch. 18 - Prob. 20Q Ch. 18 - Prob. 21Q Ch. 18 - Prob. 22Q Ch. 18 - Prob. 23Q Ch. 18 - Prob. 24Q Ch. 18 - Prob. 25Q Ch. 18 - Prob. 26Q Ch. 18 - Prob. 27Q Ch. 18 - Prob. 28Q Ch. 18 - Prob. 29Q Ch. 18 - Prob. 30Q Ch. 18 - Prob. 31Q Ch. 18 - Prob. 32Q Ch. 18 - Prob. 33Q Ch. 18 - Prob. 34Q Ch. 18 - Prob. 35Q Ch. 18 - Prob. 36Q Ch. 18 - Prob. 37Q Ch. 18 - Prob. 38Q Ch. 18 - Prob. 39Q Ch. 18 - Prob. 1BE Ch. 18 - Prob. 2BE Ch. 18 - BE18-3 (L02) Hillside Company enters into a...Ch. 18 - Prob. 4BE Ch. 18 - Prob. 5BE Ch. 18 - Prob. 6BE Ch. 18 - Prob. 7BE Ch. 18 - Prob. 8BE Ch. 18 - Prob. 9BE Ch. 18 - Prob. 10BE Ch. 18 - Prob. 11BE Ch. 18 - Prob. 12BE Ch. 18 - Prob. 13BE Ch. 18 - Prob. 14BE Ch. 18 - Prob. 15BE Ch. 18 - Prob. 16BE Ch. 18 - Prob. 17BE Ch. 18 - Prob. 18BE Ch. 18 - Prob. 19BE Ch. 18 - Prob. 20BE Ch. 18 - Prob. 21BE Ch. 18 - Prob. 22BE Ch. 18 - Prob. 23BE Ch. 18 - Prob. 24BE Ch. 18 - Prob. 25BE Ch. 18 - E18-1 (L01) (Fundamentals of Revenue Recognition)...Ch. 18 - E18-2 (L01) (Fundamentals of Revenue Recognition)...Ch. 18 - Prob. 3E Ch. 18 - Prob. 4E Ch. 18 - Prob. 5E Ch. 18 - Prob. 6E Ch. 18 - Prob. 7E Ch. 18 - Prob. 8E Ch. 18 - Prob. 9E Ch. 18 - Prob. 10E Ch. 18 - Prob. 11E Ch. 18 - Prob. 12E Ch. 18 - Prob. 13E Ch. 18 - Prob. 14E Ch. 18 - Prob. 15E Ch. 18 - Prob. 16E Ch. 18 - Prob. 17E Ch. 18 - Prob. 18E Ch. 18 - Prob. 19E Ch. 18 - Prob. 20E Ch. 18 - Prob. 21E Ch. 18 - Prob. 22E Ch. 18 - Prob. 23E Ch. 18 - Prob. 24E Ch. 18 - Prob. 25E Ch. 18 - Prob. 26E Ch. 18 - Prob. 27E Ch. 18 - Prob. 28E Ch. 18 - Prob. 29E Ch. 18 - Prob. 30E Ch. 18 - Prob. 31E Ch. 18 - Prob. 32E Ch. 18 - Prob. 33E Ch. 18 - Prob. 34E Ch. 18 - Prob. 35E Ch. 18 - Prob. 36E Ch. 18 - Prob. 37E Ch. 18 - Prob. 38E Ch. 18 - Prob. 1P Ch. 18 - Prob. 2P Ch. 18 - P18-3 (LO2,3,4) (Allocate Transaction Price,...Ch. 18 - Prob. 4P Ch. 18 - Prob. 5P Ch. 18 - Prob. 6P Ch. 18 - Prob. 7P Ch. 18 - Prob. 8P Ch. 18 - Prob. 9P Ch. 18 - Prob. 10P Ch. 18 - Prob. 11P Ch. 18 - Prob. 12P Ch. 18 - Prob. 1CA Ch. 18 - CA18-2 (Satisfying Performance Obligations) Judy...Ch. 18 - CA18-3 (Recognition of Revenue Theory) Revenue is...Ch. 18 - CA18-4 (Recognition of Revenue-Theory) Revenue is...Ch. 18 - Prob. 5CA Ch. 18 - CA18-6 (Recognition of Revenue from Subscriptions)...Ch. 18 - Prob. 7CA Ch. 18 - Prob. 8CA Ch. 18 - Prob. 9CA Ch. 18 - Prob. 1UJ Ch. 18 - Prob. 2UJ Ch. 18 - Prob. 3UJ Ch. 18 - Prob. 4UJ Ch. 18 - Prob. 1CE Ch. 18 - Prob. 2CE Ch. 18 - Prob. 3CE Ch. 18 - Prob. 4CE Ch. 18 - Prob. 1CRC

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