During 2021, Cord Builders, Inc. work on a P9,000,000 fixed-price construction contract that was completed in 2022. Cord's accounting records disclosed the following: 2021 2022 Cumulative contract costs incurred 3,900,000 6,300,000 Estimated total cost 7,800,000 8,100,000 Compute for the Gross Profit using the following methods: Year 2021 Year 2022 Completed Contract Method Zero Profit Method Percentage of Completion Method

During 2021, Cord Builders, Inc. work on a P9,000,000 fixed-price construction contract that was completed in 2022. Cord's accounting records disclosed the following: 2021 2022 Cumulative contract costs incurred 3,900,000 6,300,000 Estimated total cost 7,800,000 8,100,000 Compute for the Gross Profit using the following methods: Year 2021 Year 2022 Completed Contract Method Zero Profit Method Percentage of Completion Method

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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The Nick Construction Company uses the percentage completion method to record long-term contracts. Information for the most recent years is shown below. 2019 2020 2021 Costs incurred to date 300,000 900,000 1,600,000 Estimated Costs to complete 1,200,000 700,000 0 Billings to date 250,000 800,000 2,000,000 Collections to date 175,000 700,000 2,000,000 Required: Prepare the journal entries for 2019 and 2020 necessary to record
Contract price of $2,400,000. Estimated. Information relating to the costs and billings for this contract is as follows: 2019 2020 2021 Costs incurred during the year 700,000 1,100,000 750,000 Estimated costs to complete 1,300,000 800,000 Instructions 1- Using the percentage-of-completion method, compute the gross profit or loss to be recognized each year. 2- Using the cost recovery method, compute the gross profit or loss to be recognized each year
ABC Construction Company began operations in 2020. Construction activity for the first year is shown below. All contracts are with different customers and any work remaining at December 31, 2020 is expected to be completed in 2021. Project Contract Price Billings Collections Actual Costs Additional cost to complete 1 5,600,000 3,600,000 3,400,000 4,500,000 1,125,000 2 6,700,000 2,200,000 2,100,000 1,260,000 5,040,000 3 5,200,000 5,200,000 4,935,125 3,800,000 0 The company uses the percentage of completion method in accounting for its projects. A. The amount of current asset/ liability reported for the projects in the year-end balance sheet is? B. The net profit or loss reported by ABC in its income statement for 2020 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
Question: Assume that an architect hired by the company made the following estimates of the project’s percentage of completion at 50%, 90% and 100% at the end of 2020,2021, and 2022, respectively, what is the realized gross profit for 2021, using percentage of completion method – output measures as determined by estimates made by the architect?
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?
Sheridan Construction Co. uses the percentage-of-completion method. In 2024, Sheridan began work on a contract for $21300000; it was completed in 2025. The following cost data pertain to this contract: Cost incurred during the year Estimated costs to complete at the end of year Year Ended December 31 $8516000. $2990000. $3680000. $3684000. 2024 $7254000 4836000 2025 $5530000 The amount of gross profit to be recognized on the income statement for the year ended December 31, 2025 is
On April 12, 2021, Jacob’s Construction contracted to build a 400 Unit Apartment Complex at a contract price of $85 million. The schedule of expected (which equals actual) cash collections and contract direct costs (excluding SG&A) is as follows: Year Cash Collections Cost Incurred 2021 $60 million $ 45 million 2022 20 million 27 million Total $80 million $72 million Calculate the Gross Profit for the Total Contract Calculate the Gross Margin for the Total Contract Calculate the revenue for 2021 Calculate the revenue for 2022 Calculate the gross profit for 2021 Calculate the gross profit for 2022 Calculate the gross margin for 2021 Calculate the gross margin for 2022
During 2023, Pharoah Company started a construction job with a contract price of $1,728, 000. The job was completed in 2025. The following information is available. The contract is non - cancellable. 2023 2024 2025 Costs incurred to date 432,000 891, 000 1, 155, 600 Estimated costs to complete 648, 000 297, 000 0 Billings to date 324, 000 972, 000 1,728, 000 1,539,000 Collections to date 291, 600 874, 800 Prepare all necessary journal entries for the Pharoah contract for 2024. ( Use Materials, Cash, Payables for costs incurred to date.)
In 2021, ABC Company agreed to construct a commercial building at a price of P7,500,000. ABC uses the percentage of completion method. The information relating to the costs and billings for the contract were as follows: 2021 2022 2023 Cost P2,100,000 P4,500,000 P5,887,500 incurred to date Estimated 3,900,000 1,500,000 cost to complete 7,500,000 Progress billings to date 1,125,000 3,000,000 Collection 900,000 2,400,000 7,050,000 to date How much is the contract asset (liability) as of December 31, 2022 using View 1 of the PIC? Group of answer choices (P2,625,000) (P1,500,000) P2,625,000 P1,500,000
Rogers Ltd. has entered into a contract beginning in February 2020 to build two warehouses for ocean Ltd. The contract is a non-cancellable fixed price contract for $9.4 million. The following data pertain to the construction period. 2020 2021 2022 Costs for the year $3,285,000 4,015,000 1,800,000 Estimated costs to complete 4,015,000 1,825,000 -0- Progress billings for the year (non-refundable) 2,960,000 3,440,000 3,000,000 Cash collected for the year 2,605,000 3,490,000 3,305,000 a) Using the percentage-of-completion method, calculate the percent complete for each year of the contract. b) Calculate the amount of the gross profit to be recognized each year of the contract. c) Prepare the journal entries for 2020 and 2021. (Use Materials, Cash, Payables for costs incurred to date.) d) What is the balance in the Contract Asset/Liability account at December 31, 2020 and 2021? Show how the construction contract would be reported on the SFP…
On January 1, 2016, AVIDA was contracted to construct a townhouse for SM Corp. for a total contract price of P50,400,000. The building was completed by November 31, 2018. The following are the data of AVIDA: 2016 2017 2018 Contract cost incurred during the 19,200,000 15,600,000 8,700,000 year Estimated cost at completion 38,400,000 43,500,000 43,500,000 Billing during the year 19,200,000 21,000,000 10,200,000 The entry to record the recognized profit in 2018 includes credit to O CIP 1,380,000 Contract revenue 10,080,000 O CIP 50,400,000 Contract cost 8,700,000