Assume that Cullumber Construction Company has a non-cancellable contract to construct a $4,600,000 bridge at an estimated costof $4,140,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain tothe construction period. Assume that progress billings are non-refundable.202320242025Costs to date (12/31)$1,076,400$2,980,800$4,657,500Estimated costs to complete (12/31)3,063,6001,676,700Progress billings during the year957,0002,422,0001.221,000Cash collected during the year774,0001,881,0001,945,000The revised estimates for the bridge contract are as follows.2023 Original Estimates2024 Revised EstimatesContract price$4,600,000$4,600,000Estimated total cost4,140,0004,657,500*Estimated gross profit$460,000Estimated loss$(57,500)*$2,980,800+ $1,676,700(a1)* Your answer is incorrect.Under the percentage-of-completion method, calculate the total loss in 2024.Total loss in 2024$LA156400

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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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Build a Bridge Inc. prepares its financial statements in accordance with IFRS. The company started work on a contract in May 2023 to build a small bridge at a fixed price of $10,000,000. The bridge was to be completed by September 2025 at a total estimated cost of $8,000,000. Total cumulative costs incurred by the end of December 2023 and 2024 were $2,000,000 and $5,500,000, respectively. Because of cost overruns in 2024, it is now expected that the project will cost $800,000 more than originally estimated. Final costs at the end of the project totalled $9,000,000. Required Determine the amount of gross profit to be recognized for the years ending December 31, 2023 and 2024. First calculate the percent complete on December 31, 2023. The percent complete on December 31, 2023 is %.
The Leto Construction Company began work on a $12.000 contract on 1/1/20. Planned completion was in 2022. The Percentage-of Completion method a used Given the following December 31 2021 $4.200 6,300 5,100 6,000 2020 2022 $11,650 $2,500 Costs incumed to dute Esbinated costs to compiete Bitingu to date Collections to date 7,600 4.000 3,800 12,000 11,900 The 12/31/21 belance of Construction in Progress is Select one O. $4300 Ob S5040 O $5.000 Od $4200 O $4800
Manama Corporation started its operations on January 1, 2020. On December 31, 2020, the following information was available for the two construction contracts. Cash Collections Estimated Additional Costs to Cost Billings through 12/31/20 Incurred through 12/31/20 $424,000 Total through 12/31/20 $310,000 Contract Contract No. I No. 2 Price S500,000 450,000 $340,000 400,000 Complete S101,000 400,000 320,000 80,000 If Manama Corporation uses the Cost-Recovery Method: Required 1: For contact No. 1: a. How much gross profit or gross loss should be recognized in 2020, and Why? b. Prepare the necessary journal entry?
Cullumber Construction Inc., which has a calendar year end, has entered into a non-cancellable fixed price contract for $2.6 million beginning September 1, 2020, to build a road for a municipality. It has been estimated that the road construction will be complete by June 2022. The following data pertain to the construction period. 2020 2021 2022 Costs to date $816,000 $1,664,400 $2,182,000 Estimated costs to complete 1,584,000 525,600 0 Progress billings to date (non-refundable) 860,000 2,132,000 2,600,000 Cash collected to date 716,000 2,023,000 2,600,000 Using the percentage-of-completion method, calculate the estimated gross profit that would be recognized during each year of the construction period. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) 2020 Gross profit/(loss) $ 2021 2022
Dalton Construction Co. contracted to build a bridge for $10,000,000. Construction began in 2021 and was completed in 2022. Data relating to the construction are: Costs incurred during the year Estimated costs to complete Dalton uses the percentage-of-completion method. 2021 $3,300,000 2,700,000 2022 $2,750,000 Instructions (a) How much revenue should be reported for 2021? Show your computation. (b) Make the entry to record progress billings of $4,100,000 during 2021. (c) Make the entry to record the revenue and gross profit for 2021. (d) How much gross profit should be reported for 2022? Show your computation.
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Construction costs: 2020: $100,000 2021: $186,000 2022: $464,000 Estimated Costs to Complete: 2020: $400,000 2021: $464,000 2022: $0 Total Contract Price: $700,00O Assuming this company uses the percentage of completion method, how much Gross Profit/Loss will the company recognize in 2021? O $464,000 O $(90,000) O $(22,000) O $50,000
In 2021, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2023. Information related to the contract is as follows: 2021 2022 2023 Cost incurred during the year $ 2,640,000 $ 2,300,000 $ 2,926,000 Estimated costs to complete as of year-end 6,160,000 2,660,000 0 Billings during the year 2,080,000 2,860,000 5,060,000 Cash collections during the year 1,840,000 2,800,000 5,360,000 Westgate recognizes revenue over time according to percentage of completion. Required:1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. (Do not round intermediate calculations. Loss amounts should be indicated with a minus sign.)
Assume Nortel Networks contracted to provide a customer with Internet infrastructure for $2,350,000. The project began in 2021 and was completed in 2022. Data relating to the contract are summarized below: 2021 2022 Costs incurred during the year $ 328,000 $ 1,701,000 Estimated costs to complete as of 12/31 1,312,000 0 Billings during the year 436,000 1,914,000 Cash collections during the year 292,000 2,058,000 Required:1. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming Nortel recognizes revenue over time according to percentage of completion.2. Compute the amount of revenue and gross profit or loss to be recognized in 2021 and 2022 assuming this project does not qualify for revenue recognition over time.3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2021 assuming Nortel recognizes revenue over time according to…
Hardhat Construction Company has a contract to construct a €4,500,000 bridge at an estimated cost of €4,556,250. The contract is to start in July 2019, and the bridge is to be completed in October 2021. The following data pertain to the construction period. 2019 2020 2021 Cost to date $ 1,000,000 $ 2,916,000 $ 4,556,250 Estimated cost to complete 3,000,000 $ 1,640,250 Progress billing during the year 900,000 2,400,000 1,200,000 Cash collected during the year 750,000 1,750,000 2,000,000 REQUIRED: a) Using percentage-of-completion method, prepare schedules to compute the profit and loss to be recognized as a result of this contract for the year ended October 31, 2019, 2020 and 2021. b) Using cost recovery method, prepare schedules to compute the profit and loss to be recognized as a result of this contract for the year ended October 31, 2019, 2020 and 2021.
Assume that Blossom Construction Company has a non-cancellable contract to construct a $5,400,000 bridge at an estimated cost of $4,000,000. The contract is to start in July 2023, and the bridge is to be completed in October 2025. The following data pertain to the construction period. (Note that, by the end of 2024, Blossom has revised the estimated total cost from $4,000,000 to $4,027,000.) Assume that progress billings are non-refundable. Assume that the company uses the completed-contract method. Costs to date (12/31) Estimated costs to complete (12/31) Progress billings during the year Cash collected during the year (To record cost of construction) (To record progress billings) (To record collections) 2023 (To record revenues) $1,000,000 3,000,000 958,000 909,000 2024 $2,899,440 1,127,560 2,479,000 1,819,000 What would the journal entries be for 2025? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required,…

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