2022 $ 350,000 Kailey Construction accepted a three-year, $1,000,000 fixed fee contract to renovate a parking deck. Kailey uses the percentage of completion method and the cost-to-cost method of measuring progress. Information related to the construction contract follows: Actual construction costs incurred during the year 2023 2024 $525,000 $ 50,000 Construction costs incurred in prior years 0 350,000 875,000 Cumulative construction costs incurred to date 350,000 875,000 925,000 Estimated costs to complete 450,000 25,000 0 Estimated total costs 800,000 900,000 925,000 Progress billings made during the year 500,000 300,000 200,000 Cash collections during the year 400,000 350,000 250,000 Required: a. Calculate the percentage of completion, revenues and gross profits recognized for each year. b. Prepare the journal entries required for each year to record the contract. Show all supporting computations. c. Prepare partial balance sheet for 2022 and 2023.
2022 $ 350,000 Kailey Construction accepted a three-year, $1,000,000 fixed fee contract to renovate a parking deck. Kailey uses the percentage of completion method and the cost-to-cost method of measuring progress. Information related to the construction contract follows: Actual construction costs incurred during the year 2023 2024 $525,000 $ 50,000 Construction costs incurred in prior years 0 350,000 875,000 Cumulative construction costs incurred to date 350,000 875,000 925,000 Estimated costs to complete 450,000 25,000 0 Estimated total costs 800,000 900,000 925,000 Progress billings made during the year 500,000 300,000 200,000 Cash collections during the year 400,000 350,000 250,000 Required: a. Calculate the percentage of completion, revenues and gross profits recognized for each year. b. Prepare the journal entries required for each year to record the contract. Show all supporting computations. c. Prepare partial balance sheet for 2022 and 2023.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:2022
$ 350,000
Kailey Construction accepted a three-year, $1,000,000 fixed fee contract to renovate a parking
deck. Kailey uses the percentage of completion method and the cost-to-cost method of measuring
progress. Information related to the construction contract follows:
Actual construction costs incurred during
the year
2023
2024
$525,000
$ 50,000
Construction costs incurred in prior years
0
350,000
875,000
Cumulative construction costs incurred to
date
350,000
875,000
925,000
Estimated costs to complete
450,000
25,000
0
Estimated total costs
800,000
900,000
925,000
Progress billings made during the year
500,000
300,000
200,000
Cash collections during the year
400,000
350,000
250,000
Required:
a. Calculate the percentage of completion, revenues and gross profits recognized for each year.
b. Prepare the journal entries required for each year to record the contract. Show all supporting
computations.
c. Prepare partial balance sheet for 2022 and 2023.
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