2023 Account Titles and Explanation | (To record contract expenses) (To record collections) (To record construction expense) (To record revenues) Debit Credit
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On January 1, 2023, Cullumber Corp., a management consulting frm, entered into a contract with Viking Company to provide
advisory services over a four-year period. The contract price was $4,080,000 and was to be paid in four equal annual payments at
the end of each year. Cullumber's expenses relating to this contract were $663,000, $744,600, $795,600 and $724,200 for 2023-
2026. Collectibility was reasonably assured throughout the duration of the contract and measurement uncertainties were NOT an
issue.
Using the contract-based revenue recognition model, prepare
2023
2024
2025
2026
Step by step
Solved in 2 steps
- Need part 2-c, 3, & 4 2-c. In the journal below, complete the necessary journal entries for the year 2023 (credit "Various accounts" for construction costs incurred).3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract.4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. 2021 2022 2023Cost incurred during the year $ 2,520,000 $ 3,860,000 $ 3,220,000 Estimated costs to complete as of year-end 5,720,000 3,220,000 0The board of directors of Oriole Construction Corp. is meeting to choose between the completed-contract method and the percentage-of-completion method of accounting for long-term contracts in the company's financial statements. You have been engaged to assist Oriole's controller in the preparation of a presentation to be given at the board meeting. The controller provides you with the following information: 1. Oriole commenced doing business on January 1, 2023. 2. Construction activities for the year ended December 31, 2023, were as follows: Project Total Contract Price Billings through Cash collections 12/31/23 through 12/31/23 A $498,150 275,400 251,100 B 364,500 102,060 102,060 C 384,750 384,750 315,900 D 486,000 194,400 129,600 E 388,800 324,000 324,000 $2,122,200 $1,280,610 $1,122,660 Contract Costs Incurred Through Project 12/31/23 Estimated Additional Costs To Complete Contracts A $413,100 $97,200 B 94,770 221,130 C 283,500 -0- 299,700 234,900 E 259,200 64,800 $1,350,270…answer in text form please (without image)
- Calculate the amount of revenue to be recognized in 2020 and 2021. Calculate the construction costs to be expensed in 2021. Prepare the journal entry at December 31, 2021, to record long-term contract revenues, expenses, and losses for 2021. What is the balance in the Contract Asset/Liability account at December 31, 2020 and 2021? Show how the construction contract would be reported on the SFP and the income statement for the year ended December 31, 2021. Assume that Cullumber uses the zero-profit or completed-contract method. What would be the journal entry recorded on December 31, 2021?7 What will a contingency note contain? Review Later A circumstance where a company may have a liability A disclosure of future contracts to be performed A disclosure of all future commitments of the company A set of criteria required to be able to recognize revenue#14 How should the balances of Progress Billings and Construction in Process be shown at reporting dates prior to the completion of a long-term contract? Question 14 options: a Net balance, as income from construction if credit balance, and loss from construction if debit balance b Progress Billings as deferred income, Construction in Progress as a deferred expense c Progress Billings as income, Construction in Process as inventory d Net balance, as a current asset if debit balance, and current liability if credit balance
- 1.2.14: How do maintenance service contracts affect revenue recognition? a)Recognize full amount at inception b) Straight-line over service period c) Based on actual service calls d) When customer pays6. NAPAPALUNOK AKO AS OF THE MOMENT INC. sells 3- year service contracts for air conditioning units for P1,500 each. Sales of service contracts are made evenly throughout each year. The company estimates that 15% of repairs are done in the first year from the date of sale, 35% in the second year, and 50% in the third year. Service contracts sold are as follows. 2018 2019 2020 Number of service contracts sold 1,400 1,820 1,6506. NAPAPALUNOK AKO AS OF THE MOMENT INC. sells 3- year service contracts for air conditioning units for P1,500 each. Sales of service contracts are made evenly throughout each year. The company estimates that 15% of repairs are done in the first year from the date of sale, 35% in the second year, and 50% in the third year. Service contracts sold are as follows. 2018 2019 2020 Number of service contracts sold 1,400 1,820 1,650
- David Mendez Under the percentage-of-completion method, how should the balances of progress billings and construction in process be disclosed in the financial statements prior to the completion of the contract? net, as income from construction if a credit balance, and loss from construction if a debit balance progress billings as deferred income, construction in progress as a deferred expense net, as a current asset if a debit balance, and a current liability if a credit balance progress billings as income, construction in process as inventoryCarla Vista Construction Company began operations on January 1, 2020. During the year, Carla Vista entered into a non-cancellable contract with Martinez Corp. to construct a manufacturing facility. At that time, Carla Vista estimated that it would take five years to complete the facility at a total cost of $4,505,000. The total contract price for construction of the facility is $6,003,000. During the year, Carla Vista incurred $1,075,000 in construction costs related to the project. The estimated cost to complete the contract is $4,300,000. Martinez Corp. was billed and paid 27% of the contract price. The billings are non-refundable. Prepare schedules to calculate the amount of gross profit to be recognized for the year ended December 31, 2020, and the amount to be shown as contract assets or liabilities at December 31, 2020, under the completed-contract method. (Do not leave any answer field blank. Enter O for amounts. Enter negative amounts using either a negative sign preceding the…Demonstrate revenue recognition for long-term contracts, both at a point intime when the contract is completed and over a period of time according to thepercentage completed.
