**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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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
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