In 2018, Long Construction Corporation began construction work under a three-year contract. The contract priceis $1,600,000. Long recognizes revenue over time according to percentage of completion for financial reportingpurposes. The financial statement presentation relating to this contract at December 31, 2018, is as follows:Balance SheetAccounts receivable (from construction progress billings) $30,000Construction in progress $100,000 Less: Billings on construction contract (94,000)Cost and profit of uncompleted contracts in excess of billings 6,000Income StatementIncome (before tax) on the contract recognized in 2018 $20,000Required:1. What was the cost of construction actually incurred in 2018?
In 2018, Long Construction Corporation began construction work under a three-year contract. The contract price
is $1,600,000. Long recognizes revenue over time according to percentage of completion for financial reporting
purposes. The financial statement presentation relating to this contract at December 31, 2018, is as follows:
Balance Sheet
Accounts receivable (from construction progress billings) $30,000
Construction in progress $100,000
Less: Billings on construction contract (94,000)
Cost and profit of uncompleted contracts in excess of billings 6,000
Income Statement
Income (before tax) on the contract recognized in 2018 $20,000
Required:
1. What was the cost of construction actually incurred in 2018?
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