American Construction Company has entered into a contract with American University in Cairo beginning January 1, 2017 to construct Digital Library Building. It has been estimated that the costs of the building to be $2,100,000 and the contract price will be $3,265,000. It will take 3 years to construct the building. The company uses cost recovery method. If the following data pertain to the building during the construction period. 2017 $945,000 1,155,000 900,000 800,000 2018 $1,575,000 2019 $2,135,000 -0- Costs to date Estimated costs to complete Progress billings to date Cash collected to date 525,000 1,970,000 1,750,000 3,265,000 3,265,000 Requirements: Required 1: Compute the gross profit of loss recognized each year. Required 2: The balance of construction in process in 2017 and 2018 will be: Required 3: Assume the same data for the digital library contract except that the estimated cost in 2018 was $1,050,000 instead of $525,000. A. Compute the gross profit or loss recognized in 2018. B. Provide explanation for you answer? Required 4: Assume the same data for the digital library contract except that the estimated cost in 2018 was $2,100,000 instead of S525,000 and the cost to date in 2019 was $3,675,000 instead of S2,135,000. A. Compute the gross profit or loss recognized in 2017 and 2018. ioumal entry to recognize the loss (if any) in 2018.
American Construction Company has entered into a contract with American University in Cairo beginning January 1, 2017 to construct Digital Library Building. It has been estimated that the costs of the building to be $2,100,000 and the contract price will be $3,265,000. It will take 3 years to construct the building. The company uses cost recovery method. If the following data pertain to the building during the construction period. 2017 $945,000 1,155,000 900,000 800,000 2018 $1,575,000 2019 $2,135,000 -0- Costs to date Estimated costs to complete Progress billings to date Cash collected to date 525,000 1,970,000 1,750,000 3,265,000 3,265,000 Requirements: Required 1: Compute the gross profit of loss recognized each year. Required 2: The balance of construction in process in 2017 and 2018 will be: Required 3: Assume the same data for the digital library contract except that the estimated cost in 2018 was $1,050,000 instead of $525,000. A. Compute the gross profit or loss recognized in 2018. B. Provide explanation for you answer? Required 4: Assume the same data for the digital library contract except that the estimated cost in 2018 was $2,100,000 instead of S525,000 and the cost to date in 2019 was $3,675,000 instead of S2,135,000. A. Compute the gross profit or loss recognized in 2017 and 2018. ioumal entry to recognize the loss (if any) in 2018.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:6 points
American Construction Company has entered into a contract with American University in Cairo beginning January 1, 2017 to construct Digital Library
Building. It has been estimated that the costs of the building to be $2,100,000 and the contract price will be $3,265,000. It will take 3 years to construct the
building. The company uses cost recovery method.
If the following data pertain to the building during the construction period.
Save Answer
2017
$945,000
1,155,000
900,000
800,000
2018
$1,575,000
525,000
1,970,000
1,750,000
2019
$2,135,000
Costs to date
Estimated costs to complete
-0-
Progress billings to date
Cash collected to date
3,265,000
3,265,000
Requirements:
Required 1: Compute the gross profit of loss recognized each year.
Required 2: The balance of construction in process in 2017 and 2018 will be:
Required 3: Assume the same data for the digital library contract except that the estimated cost in 2018 was $1.050.000 instead of $525,000.
A. Compute the gross profit or loss recognized in 2018.
B. Provide explanation for you answer?
Required 4: Assume the same data for the digital library contract except that the estimated cost in 2018 was $2,100,000 instead of $525,000 and the cost to
date in 2019 was $3,675,000 instead of S2,135,000.
A. Compute the gross profit or loss recognized in 2017 and 2018.
B. Prepare the journal entry to recognize the loss (if any) in 2018.
OLTTF10 (PC) or ALT+FN+F10 (Mac).
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 6 images
Knowledge Booster
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education