Evans Construction, Inc. experienced the following construction activity in 2018, the first year of operations. Cash Cost Estimated Total Billings Collections Incurred Additional Contract through through through Costs to Contract Price 12/31/18 12/31/18 12/31/18 Complete X €260,000 €170,000 €155,000 €182,000 € 63,000 Y 330,000 125,000 125,000 105,000 252,000 Z 233,000 233,000 198,000 158,000 -0- €823,000 €528,000 €478,000 €445,000 €315,000 Each of the above contracts is with a different customer, and any work remaining at December 31, 2018 is expected to be completed in 2019. Instructions: a. Prepare a schedule by project, computing the amount of gross profit be reported under: (1) The cost-recovery method. (2) The percentage-of-completion method (based on estimated costs). b. Prepare a partial income statement and a partial statement of financial to indicate how the above contract information would be reported. Evans uses the cost-recovery method.
- Evans Construction, Inc. experienced the following construction activity in 2018, the first year of operations.
Cash Cost Estimated
Total Billings Collections Incurred Additional
Contract through through through Costs to
Contract Price 12/31/18 12/31/18 12/31/18 Complete
X €260,000 €170,000 €155,000 €182,000 € 63,000
Y 330,000 125,000 125,000 105,000 252,000
Z 233,000 233,000 198,000 158,000 -0-
€823,000 €528,000 €478,000 €445,000 €315,000
Each of the above contracts is with a different customer, and any work remaining at December 31, 2018 is expected to be completed in 2019.
Instructions:
a. Prepare a schedule by project, computing the amount of gross profit be reported under:
(1) The cost-recovery method.
(2) The percentage-of-completion method (based on estimated costs).
b. Prepare a partial income statement and a partial statement of financial to indicate how the above contract information would be reported. Evans uses the cost-recovery method.
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