BC Construction Ltd was the low bidder on a construction project to build a skyscraper for$5,000,000. The project began in 2023 and completed in 2024. Cost and other data arepresented below:20232024Costs incurred during the year$1,200,000$2,300,000Estimated costs to complete$2,000,000$Billings during the year$1,000,000$4,000,000Cash collections during the year$800,000$4,200,000Assume that BC recognizes revenue on this contract upon completion of contract.Required:Compute the amount of gross profit recognized during 2023 and 2024.

Gross Profit for 2023:Step 1. Determine the percentage of completion for 2023:Costs incurred in…

Answered: BC Construction Ltd was the low bidder…

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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9 Beavis Construction Company was the low bidder on a construction project to build an earthen dam for $1,750,000. The project was begun in 2023 and completed in 2024. Cost and other data are presented below 2023 2024 cost incurred during the year 469,000 $ 1,050,000 estimated cost to complete 871,000 $ billings during the year 480,000 $ 1,270,000 cash collections during the year 380,000 $ 1,370,000 Year General Journal Debit Credit Assume that Beavis recognizes revenue on this contract over time according to percentage of completion Required: a. 2023 a. b. Record the entry for costs incurred during the year 2023. Record the entry for billings during the year 2023. b. 2023 c. d. e. f. g. Record the entry for cash collections during the year 2023. Record the entry for revenue from long-term contracts. Record the entry for costs incurred during the year 2024 Record the entry for billings during the year 2024 Record the entry for cash collections during the year 2024 C. 2023 d. 2023 e.…
3
Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: 2024 2025 Costs incurred during the year $ 316,000 $ 1,700,000 Estimated costs to complete as of 12/31 1,264,000 0 Billings during the year 400,000 1,660,000 Cash collections during the year 290,000 1,770,000 Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming this project does not qualify for revenue recognition over time.
Percentage-of-Completion Method Example: Buildmore Construction Company received a contract for $6,000,000 in 2020 to build a parking deck for a large university. The following data was accumulated during the construction period: 2020 2021 2022 Costs to date $1,125,000 $2,652,000 $5,000,000 Estimated cost to complete 3,375,000 2,448,000 0 Progress billings 2,000,000 2,000,000 2,000,000 Cash collected 1,500,000 2,000,000 2,500,000 By year, record (a) Costs of Construction; (b) Progress billings; and (c) Collections. Then, recognize (d) revenue and gross profit; and lastly, (e) record completion of contract.
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Romanos Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Laura Berenstein, staff analyst at Romanos, is preparing an analysis of the three projects under consideration by Chester Romanos, the company's owner. Data Table A B C D 1 Project A Project B Project C 2 Projected cash outflow 3 Net initial investment $3,000,000 $2,100,000 $3,000,000 4 Projected cash inflows 5 Year 1 $1,200,000 $1,200,000 $1,700,000 6 Year 2 1,200,000 600,000 1,700,000 7 Year 3 1,200,000 500,000 200,000 8 Year 4 1,200,000 100,000 9 Required rate of return 10% 10% 10% 1. Because the company's cash is limited, Romanos thinks the payback method should be used to choose between the capital budgeting projects. a. What are the…
1
Halls Construction is analyzing its capital expenditure proposals for the purchase of equipment in the coming year. The capital budget is limited to $5,000,000 for the year. Laura Bentley, staff analyst at Halls, is preparing an analysis of the three projects under consideration by Caden Halls, the company's owner. Data Table A B C D 1 Project A Project B Project C 2 Projected cash outflow 3 Net initial investment $3,000,000 $2,100,000 $3,000,000 4 Projected cash inflows 5 Year 1 $1,200,000 $1,200,000 $1,700,000 6 Year 2 1,200,000 600,000 1,700,000 7 Year 3 1,200,000 500,000 200,000 8 Year 4 1,200,000 100,000 9 Required rate of return 6% 6% 6 1.. Calculate the payback period for each of the three projects. Ignore income taxes. Using the payback method, which projects should Halls choose?. Ignore income taxes. (Round your answers to…
0:30 aces Required Information [The following information applies to the questions displayed below.] 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: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year 2021 2022 $2,059,000 $2,627,000 5,041,000 2,414,000 2,190,000 2,496,000 1,895,000 2,400,000 Westgate recognizes revenue over time according to percentage of completion. 2023 $2,655,400 5,314,000 5,705,000 3. Complete the information required below to prepare a partial balance sheet for 2021 and 2022 showing any items related to the contract. (Do not round Intermediate calculations.)
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