**Current Attempt in Progress**On July 1, 2020, Crane Construction Company Inc. contracted to build an office building for Gumbel Corp. for a total contract price of $1,910,000. On July 1, Crane estimated it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022.| | At 12/31/20 | At 12/31/21 | At 12/31/22 ||-------------------------|-------------|-------------|-------------|| Contract costs incurred to date | $327,800 | $1,180,000 | $2,090,400 || Estimated costs to complete the contract | $1,162,200 | $820,000 | -0- || Billings to Gumbel | 300,000 | 1,110,000 | 1,870,000 |(a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) *(If answer is 0, please enter 0. Do not leave any field blank. If an amount should be deducted then enter the amount using either a negative sign preceding the number e.g. -45 or parenthesis e.g. (45).)* ## Project Cost Overview for 2021 and 2022### 2021 Financial Data:1. **Costs to date (12/31/21):** - Amount: $1,180,0002. **Estimated Costs to Complete:** - Amount: $820,000 3. **Estimated Total Costs:** - Amount: $2,000,0004. **Contract Price:** - [Field for entry]5. **Total Profit/Loss:** - [Field for entry]6. **Gross Profit Recognized in 2020:** - [Field for entry]7. **Profit/(Loss) Recognized in 2021:** - [Field for entry]---### 2022 Financial Data:1. **Costs to date (12/31/22):** - Amount: $2,090,4002. **Estimated Costs to Complete:** - [Field for entry]3. **Contract Price:** - [Field for entry]4. **Total Profit/Loss:** - [Field for entry]5. **Profit/(Loss) Recognized in 2021:** - [Field for entry]6. **Profit/(Loss) Recognized in 2020:** - [Field for entry]7. **Profit/(Loss) Recognized in 2022:** - [Field for entry]### Explanation:The table provides a detailed comparison of the project costs for two consecutive years, 2021 and 2022. Each section outlines the actual costs incurred by the end of each year, estimated costs to complete the project, and spaces for inputting contract price and profit/loss figures. The table is formatted to help educators and students track financial data and analyze profitability over time.

The percentage completion method is the method of recognizing profit or losses on contracts which extend for more than one accounting period. In the percentage completion method, the estimated total cost is subtracted from the contract price to arrive at the estimated profit. This is multiplied by the cost incurred to date divided by the total estimated cost to complete to arrive at the total profit to be recognized to date. In case there is a loss, we need to recognize the entire estimated losses on the contract.

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estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. At At At 12/31/20 12/31/21 12/31/22 Contract costs incurred to date $327,800 $ 1,180,000 $2,090,400 Estimated costs to complete the contract 1,162,200 820,000 -0- Billings to Gumbel 300,000 1,110,000 1,870,000 (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any field blank. If an amount should be deducted then enter the amount using eithera negative sign prececeding the number e-g. -45 or parenthesis es. (45).)

estimated that it would take between 2 and 3 years to complete the building. On December 31, 2022, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Gumbel for 2020, 2021, and 2022. At At At 12/31/20 12/31/21 12/31/22 Contract costs incurred to date $327,800 $ 1,180,000 $2,090,400 Estimated costs to complete the contract 1,162,200 820,000 -0- Billings to Gumbel 300,000 1,110,000 1,870,000 (a) Using the percentage-of-completion method, prepare schedules to compute the profit or loss to be recognized as a result of this contract for the years ended December 31, 2020, 2021, and 2022. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any field blank. If an amount should be deducted then enter the amount using eithera negative sign prececeding the number e-g. -45 or parenthesis es. (45).)

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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2. On February 1, 2023, Marsh Contractors agreed to construct a building at a contract price of $17,400,000. Marsh estimated total construction costs would be $12,000,000 and the project would be finished in 2025. Information relating to the costs and billings for this contract is as follows: Total costs incurred to date Estimated costs to complete Customer billings to date Collections to date 2023 2024 2025 2023 $4,500,000 7,500,000 6,600,000 6,000,000 Instructions Fill in the correct amounts on the following schedule. For percentage-of-completion accounting and cost-recovery accounting, show the gross profit that should be reported for 2023, 2024, and 2025. Percentage-of-Completion Gross Profit 2023 2024 2024 $7,920,000 2025 5,280,000 12,000,000 10,500,000 2025 $13,800,000 -0- 16,800,000 16,500,000 Cost-Recovery Gross Profit
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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,…
In 2024, 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 2026. 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 2024 $ 2,523,000 6,177,000 2,070,000 2025 $ 3,177,000 1,800,000 3,630,000 2026 $ 1,980,000 0 Cash collections during the year 1,835,000 3,400,000 4,300,000 4,765,000 Westgate recognizes revenue over time according to percentage of completion. Problem 6-10 (Algo) Part 5 5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years, assuming the following costs incurred and costs to complete information. Note: Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign. Costs incurred during the year Estimated costs to complete as of year-end 2024 $…
Assume that Sunland Construction Company has a non-cancellable contract to construct a $4,520,000 bridge at an estimated cost of $4,068,000. 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. Assume that progress billings are non-refundable. 2023 2024 2025 Costs to date (12/31) $1,017,000 $2,928,960 $4,576,500 Estimated costs to complete (12/31) 3,051,000 1,647,540 0 Progress billings during the year 968,000 2,418,000 1,134,000 Cash collected during the year 817,000 1,897,000 1,806,000 The revised estimates for the bridge contract are as follows. 2023 Original Estimates 2024 Revised Estimates Contract price $4,520,000 $4,520,000 Estimated total cost 4,068,000 4,576,500* Estimated gross profit $452,000 Estimated loss $(56,500) *$2,928,960 + $1,647,540 (a1) Under the percentage-of-completion method, calculate…
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 construction cost recognized for Project 1 at the 2020 year – end is? B. The amount of accounts receivable reported by ABC in the year- end balance sheet is? C. The amount of inventory reported for the projects in the year- end balance sheet is?
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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 $2,581,000 $2,347,000 $3,049,200 Estimated costs to complete as of year-end 6,319,000 2,772,000 0 Billings during the year 2,090,000 2,838,000 5,072,000 Cash collections during the year 1,845,000 2,900,000 5,255,000 Westgate recognizes revenue over time according to percentage of completion. Required: 1.Calculate the amount of…
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: 2021 2022 2023 Cost incurred during the year Estimated costs to complete as of year-end Billings during the year $2,400,000 $3,600,000 $2, 200,000 2,000,000 4,000,000 3,600,000 5,600,000 2,000,000 1,800,000 4,000,000 4,600,000 Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. 5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. (Do not round intermediate calculations and round your final answers to the nearest whole dollar amount. Loss amounts should be indicated with a minus sign.) 2021 $2,400,000 5,600,000…