In 2018, Ronaldo Construction Inc. agreed to construct an apartment building at a price of $10 million. Information on the costs and billings for the first two years of this contract is as follows: Costs incurred in the period Estimated costs yet to be incurred Customer billings in the period Collection of billings to date Assume the earnings approach is used. Instructions: 2022 2021 $2,180,000 4,300,000 $3,100,000 1,700,000 3,000,000 4,000,000 2,000,000 4,000,000 (a) For the percentage-of-completion method, (1) calculate the amount of gross profit to be recognized in 2021 and 2022, and (2) prepare journal entries for 2021 and 2022. (b) For 2021 and 2022, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.
In 2018, Ronaldo Construction Inc. agreed to construct an apartment building at a price of $10 million. Information on the costs and billings for the first two years of this contract is as follows: Costs incurred in the period Estimated costs yet to be incurred Customer billings in the period Collection of billings to date Assume the earnings approach is used. Instructions: 2022 2021 $2,180,000 4,300,000 $3,100,000 1,700,000 3,000,000 4,000,000 2,000,000 4,000,000 (a) For the percentage-of-completion method, (1) calculate the amount of gross profit to be recognized in 2021 and 2022, and (2) prepare journal entries for 2021 and 2022. (b) For 2021 and 2022, show how the details related to this construction contract would be disclosed on the balance sheet and on the income statement.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:4.
In 2018, Ronaldo Construction Inc. agreed to construct an apartment building at a
price of $10 million. Information on the costs and billings for the first two years
of this contract is as follows:
Costs incurred in the period
Estimated costs yet to be incurred
Customer billings in the period
Collection of billings to date
Assume the earnings approach is used.
Instructions:
(a) For the percentage-of-completion method, (1) calculate the amount of gross
profit to be recognized in 2021 and 2022, and (2) prepare journal entries for
2021 and 2022.
(b) For 2021 and 2022, show how the details related to this construction contract
sheet and on the income statement.
would be disclosed
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2022
2021
$2,180,000
$3,100,000
4,300,000
1,700,000
3,000,000 4,000,000
2,000,000
4,000,000
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