1. During 2020, Bay Construction started a new construction job with a contract price of $750 million.Bay has a 12/31 fiscal year end. Bay has determined that the contract does not qualify for revenuerecognition over time. The contract was completed on 12/31/22 with the following information ($ inmillions):Costs incurred in the period (paid in cash)Estimated costs to complete at 12/31Billings on contract in the periodCash collected in the period2020180.020212022432.0150.0540.0153.0-0-150350250200400150What is the amount of gross profit (loss) on the contract that Bay would recognize on the IncomeStatement in 2020, 2021 and 2022? You must show supporting work (calculations/explanations) toreceive credit for your answers.Gross Profit (Loss)202020212022

The objective of the question is to calculate the gross profit (or loss) for Bay Construction for…

Answered: 1. During 2020, Bay Construction…

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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Oriole Construction Company began work on a $420,000 construction contract in 2025. During 2025, Oriole incurred costs of $264, 500, billed its customber for $207,000, and collected $179,500. December 31, 2025, the estimated additional costs to complete the project total $159, 650. Prepare Oriole's journal entry to record profit or loss, if any, using (a) the percentage - of - completion method and (b) the cost-recovery method.
Lake Construction Company has consistently used the percentage of completion method in recognizing income. During 2021, Lake entered into a fixed-price contract to construct an office building for P10,000,000. Information relating to the contract is as follows: As of December 31 2021 2022 Percentage of completion 20% 60% Estimated total cost at completion P 7,500,000 P 8,000,000 Income recognized (cumulative) 500,00 1,200,000 Contract costs incurred during 2022 were: 3,200,000 3,300,000 3,500,000 4,800,000 Gross profit recognized during 2022 amounted to: 100,000 300,000 600,000 700,000
Sheridan Construction Co. uses the percentage-of-completion method. In 2024, Sheridan began work on a contract for $21300000; it was completed in 2025. The following cost data pertain to this contract: Cost incurred during the year Estimated costs to complete at the end of year Year Ended December 31 $8516000. $2990000. $3680000. $3684000. 2024 $7254000 4836000 2025 $5530000 The amount of gross profit to be recognized on the income statement for the year ended December 31, 2025 is
On April 12, 2021, Jacob’s Construction contracted to build a 400 Unit Apartment Complex at a contract price of $85 million. The schedule of expected (which equals actual) cash collections and contract direct costs (excluding SG&A) is as follows: Year Cash Collections Cost Incurred 2021 $60 million $ 45 million 2022 20 million 27 million Total $80 million $72 million Calculate the Gross Profit for the Total Contract Calculate the Gross Margin for the Total Contract Calculate the revenue for 2021 Calculate the revenue for 2022 Calculate the gross profit for 2021 Calculate the gross profit for 2022 Calculate the gross margin for 2021 Calculate the gross margin for 2022
During 2023, Pharoah Company started a construction job with a contract price of $1,728, 000. The job was completed in 2025. The following information is available. The contract is non - cancellable. 2023 2024 2025 Costs incurred to date 432,000 891, 000 1, 155, 600 Estimated costs to complete 648, 000 297, 000 0 Billings to date 324, 000 972, 000 1,728, 000 1,539,000 Collections to date 291, 600 874, 800 Prepare all necessary journal entries for the Pharoah contract for 2024. ( Use Materials, Cash, Payables for costs incurred to date.)
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,860,000. The project began in 2021 and was completed in 2022 Data relating to the contract are summarized below: 2021 $ 372,000 $1,899,00e 1,488,eee 524,000 318,eee 2022 Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year 2,336,800 2,542, 000 Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time occording to percentege of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 ssuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented ot the end of 2021 assuming Nortel recognizes revenue over time according to percentege of completion. 4. Prepare a partial…
On January 1, 2020, Miller Construction Company contracted to build a parking lot for the city of St. Louis for $825,000. The following transactions and estimates relate to this contract. Construction costs incurred during 2020 $440,000 $209,000 $192,500 $440,000 Progress billings Cash collections Estimated costs to complete a. Prepare the 2020 journal entry to record profit or loss assuming revenue is recognized over time. Note: Record any multiple debits in alphabetical order and any multiple credits in alphabetical order. a. Account b. To recognize revenues and expenses Account + # + b. Prepare the 2020 journal entry to record profit or loss assuming revenue is recognized at a point in time. Note: If a journal entry (or a line of the journal entry) isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). To recognize revenues and expenses Debit + + Credit Debit Credit
Crane Construction Co. uses the percentage-of-completion method. In 2021, Crane began work on a contract for $24475000; it was completed in 2022. The following cost data pertain to this contract: Year Ended December 31 2021 2022 Cost incurred during the year $8350000 $6150000 Estimated costs to complete at the end of year 5739000 If the completed-contract method of accounting was used, the amount of gross profit to be recognized for years 2021 and 2022 would be 2021 2022 $9975000. $(411000). $0. $10386000. $10386000. $0. $0. $9975000. O O
A company uses the percentage-of-completion method of accounting. In 2020, the company began work a project, which had a contract price of $22,300. Other details follow: 2020 2021 Costs incurred to date $6,000 $18,000 Estimated costs to complete, as of December 31 14,000 -0- Billings to date 11,460 16,830 Collections to date 9,470 14,650 In the journal entry to record progress billings for 2021, how much should Billings on Construction in Process be debited/credited? (Just enter the amount. DO NOT put a plus or minus sign in front of the amount.)
Roger Inc. began work in 2021 on a contract for $8,400,000. Other data are as follows: 2021 2022 Costs incurred to date $3,600,000 $5,600,000 Estimated costs to complete 2,400,000 — Billings to date 2,800,000 8,400,000 Collections to date 2,000,000 7,200,000 Roger uses the percentage-of-completion method. Calculate the gross profit to be recognized in 2021.
On February 1, 2023, Sandhill Contractors agreed to construct a building at a contract price of $3,460,000. The total estimated construction costs would be $1,890,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 Gross profit/ (loss) 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 $ 2,365,000 913,000 1,890,000 1,750,000 2025 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentage complete to 1 decimal place, e.g. 15.2% and final answers to O decimal places, e.g. 5,125.) 2024 -0- 3,460,000 2,950,000 -107450 $ LA 2025 40450
Kingbird Construction Company began work on a $418,500 construction contract in 2020. During 2020, Kingbird incurred costs of $285,500, billed its customer for $233,000, and collected $172,000. At December 31, 2020, the estimated additional costs to complete the project total $155,765.Prepare Kingbird’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) No. Account Titles and Explanation Debit Credit (a) enter an account title to record the transaction using the percentage-of-completion method enter a debit amount enter a credit amount enter an account title to record the transaction using the percentage-of-completion method enter a debit…

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