31. Lark Corp. has a contract to construct a P5,000,000 cruise ship at an estimated cost ofP4.000.000. The company will begin construction of the cruise ship in early January 20x4 andexpects to complete the project sometime in late 20x7. Lark Corp. has never constructed acruise ship before, and the customer has never operated a cruise ship. Due to this and othercircumstances., Lark Corp. believes there are inherent hazards in the contract beyond thenormal, recuring business risks. Lark Corp. expects to recover all its costs under the contract.During 20x4 and 20x5, the company has the following activity:Costs to dateEstimated costs to completeProgress billings during the yearCash collected during the year20x4P 980,0003,020,0001,000,000648,00020x5P 2,040,0001,960,0001,000,0001,280,000On its statement of financial position at December 31, 20x5, what amount will be reportedfor accounts receivable?P352.000.P720,000a.C.P72,000.b.d.P2.000,000.

Solution: Amount to be reported as accounts receivables in statement of financial position dated Dec…

31. Lark Corp. has a contract to construct à P4.000.000. The company will begin construction of the cruise ship in early January 20x4 and expects to complete the project sometime in late 20x7. Lark Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances. Lark Corp. believes there are inherent hazards in the contract beyond the normal, recurring business risks. Lark Corp. expects to recover all its costs under the contract. During 20x4 and 20x5, the company has the following activity: 20x5 P 2,040,000 Costs to date Estimated costs to complete Progress billings during the year Cash collected during the year 20x4 P 980.000 3.020,000 1,000,000 648.000 1,960.000 1,000,000 1,280,000 On its statement of financial position at December 31, 20x5, what amount will be reported

31. Lark Corp. has a contract to construct à P4.000.000. The company will begin construction of the cruise ship in early January 20x4 and expects to complete the project sometime in late 20x7. Lark Corp. has never constructed a cruise ship before, and the customer has never operated a cruise ship. Due to this and other circumstances. Lark Corp. believes there are inherent hazards in the contract beyond the normal, recurring business risks. Lark Corp. expects to recover all its costs under the contract. During 20x4 and 20x5, the company has the following activity: 20x5 P 2,040,000 Costs to date Estimated costs to complete Progress billings during the year Cash collected during the year 20x4 P 980.000 3.020,000 1,000,000 648.000 1,960.000 1,000,000 1,280,000 On its statement of financial position at December 31, 20x5, what amount will be reported

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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