accounting should Citation Builders, Inc adopt for its single-family houses? 6. What will Citation report in its 2021 income statement and 2021 balance sheet related to the single-family home business (ignore cash in the balance sheet)?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

3

Citation Builders, Inc., builds office buildings and single-family homes. The office buildings are constructed under contract with
reputable buyers. The homes are constructed in developments ranging from 10-20 homes and are typically sold during construction
or soon after. To secure the home upon completion, buyers must pay a deposit of 10% of the price of the home with the remaining
balance due upon completion of the house and transfer of title. Failure to pay the full amount results in forfeiture of the down payment.
Occasionally, homes remain unsold for as long as three months after construction. In these situations, sales price reductions are used
to promote the sale.
During 2021, Citation began construction of an office building for Altamont Corporation. The total contract price is $24 million, Costs
incurred, estimated costs to complete at year-end, billings, and cash collections for the life of the contract are as follows
2023
$5,400,000
Costs incurred during the year
Estimated costs to complete as of year end
Billings during the year
Cash collections during the year
Income Statement (Partial)
2021
Also during 2021, Citation began a development consisting of 12 identical homes. Citation estimated that each home will sell for
$880,000, but individual sales prices are negotiated with buyers. Deposits were received for eight of the homes, three of which were
completed during 2021 and paid for in full for $880,000 each by the buyers. The completed homes cost $660.000 each to construct
The construction costs incurred during 2021 for the nine uncompleted homes totaled $3.960,000.
E pyn
5. Which method of accounting should Citation Builders, Inc adopt for its single-family houses?
6. What will Citation report in its 2021 income statement and 2021 balance sheet related to the single-family home business (ignore
cash in the balance sheet)?
Current assets
What will Citation report in its 2021 income statement related to the single-family home business (ignore cash in the balance
sheet)?
Current liabilities
2022
2021
$4,000,000 $11,400,000
14,400,000
0
Balance Sheet (Partial)
At December 31, 2021
2,400,000
2,160,000
< Req 5
5,400,000
12,000,000
10,640,000
< Req 6A
What will Citation report in its 2021 balance sheet related to the single-family home business (ignore cash in the balance
sheet)?
9,600,000
11,200,000
Req 68 >
Hag >
Return to quest
Transcribed Image Text:Citation Builders, Inc., builds office buildings and single-family homes. The office buildings are constructed under contract with reputable buyers. The homes are constructed in developments ranging from 10-20 homes and are typically sold during construction or soon after. To secure the home upon completion, buyers must pay a deposit of 10% of the price of the home with the remaining balance due upon completion of the house and transfer of title. Failure to pay the full amount results in forfeiture of the down payment. Occasionally, homes remain unsold for as long as three months after construction. In these situations, sales price reductions are used to promote the sale. During 2021, Citation began construction of an office building for Altamont Corporation. The total contract price is $24 million, Costs incurred, estimated costs to complete at year-end, billings, and cash collections for the life of the contract are as follows 2023 $5,400,000 Costs incurred during the year Estimated costs to complete as of year end Billings during the year Cash collections during the year Income Statement (Partial) 2021 Also during 2021, Citation began a development consisting of 12 identical homes. Citation estimated that each home will sell for $880,000, but individual sales prices are negotiated with buyers. Deposits were received for eight of the homes, three of which were completed during 2021 and paid for in full for $880,000 each by the buyers. The completed homes cost $660.000 each to construct The construction costs incurred during 2021 for the nine uncompleted homes totaled $3.960,000. E pyn 5. Which method of accounting should Citation Builders, Inc adopt for its single-family houses? 6. What will Citation report in its 2021 income statement and 2021 balance sheet related to the single-family home business (ignore cash in the balance sheet)? Current assets What will Citation report in its 2021 income statement related to the single-family home business (ignore cash in the balance sheet)? Current liabilities 2022 2021 $4,000,000 $11,400,000 14,400,000 0 Balance Sheet (Partial) At December 31, 2021 2,400,000 2,160,000 < Req 5 5,400,000 12,000,000 10,640,000 < Req 6A What will Citation report in its 2021 balance sheet related to the single-family home business (ignore cash in the balance sheet)? 9,600,000 11,200,000 Req 68 > Hag > Return to quest
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Market Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education