Redsiam, Inc. began work in 2020 on contract #3814, which provided for a contract price of P7,200,000. Other details follow: 20202021Costs incurred during the yearP1,200,000P3,675,000Estimated costs to complete, as of December 31Billings during the year3,600,0001,350,0005,400,000Collections during the year900,0005,850,000Assume that Redsiam uses the completed-contract method of accounting. The portion of thetotal gross profit to be recognized as income in 2021 is

Gross profit is that the profit a corporation makes once deducting the prices related to creating…

2020 2021 Costs incurred during the year Estimated costs to complete, as of December 31 Billings during the year Collections during the year P1,200,000 P3,675,000 3,600,000 1,350,000 5,400,000 900,000 5,850,000 Assume that Redsiam uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2021 is

2020 2021 Costs incurred during the year Estimated costs to complete, as of December 31 Billings during the year Collections during the year P1,200,000 P3,675,000 3,600,000 1,350,000 5,400,000 900,000 5,850,000 Assume that Redsiam uses the completed-contract method of accounting. The portion of the total gross profit to be recognized as income in 2021 is

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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Concept explainers

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 for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

Redsiam, Inc. began work in 2020 on contract #3814, which provided for a contract price of P7,200,000. Other details follow:

2020
2021
Costs incurred during the year
P1,200,000
P3,675,000
Estimated costs to complete, as of December 31
Billings during the year
3,600,000
1,350,000
5,400,000
Collections during the year
900,000
5,850,000
Assume that Redsiam uses the completed-contract method of accounting. The portion of the
total gross profit to be recognized as income in 2021 is

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