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.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter17: Advanced Issues In Revenue Recognition

Section: Chapter Questions

Problem 10C

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Similar questions

1. Determine the amount of construction in progress that will be reported. 2. How much revenue is recognized as of the end of the first year?
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?
Domestic
How much is income from construction for 2019? Please refer to the picture below to answer the question.
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The Leto Construction Company began work on a $15,000 contract on 1/1/22. Planned completion was in 2024. The Percentage-of Completion method is used. Given the following at 12/31/22: Costs incurred to date Estimated costs to complete Billings to date Collections to date December 31, 2022 $2,500 9,500 4,000 3,800 The balance sheet location and the net amount of the 12/31/22 Combined CIP and Billings accounts are: Select one: O a. Current Liability of $1,500 O b. Current Liability of $200 c. Current Asset of $1,500 d. Current Liability of $875
On February 1, 2023, Sandhill Contractors agreed to construct a building at a contract price of $3,460,000. The total estimated construction costs would be $1,890,000 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 Gross profit/ (loss) 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 $ 2,365,000 913,000 1,890,000 1,750,000 2025 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45). Round percentage complete to 1 decimal place, e.g. 15.2% and final answers to O decimal places, e.g. 5,125.) 2024 -0- 3,460,000 2,950,000 -107450 $ LA 2025 40450
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Assume Avaya contracted to provide a customer with Internet infrastructure for $2,200,000. The project began in 2024 and was completed in 2025. Data relating to the contract are summarized below: Costs incurred during the year Estimated costs to complete as of 12/31 Billings during the year Cash collections during the year Complete this question by entering your answers in the tabs below. Required: 1. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming Avaya recognizes revenue over time according to percentage of completion. 2. Compute the amount of revenue and gross profit or loss to be recognized in 2024 and 2025, assuming this project does not qualify for revenue recognition over time. 3. Prepare a partial balance sheet to show how the information related to this contract would be presented at the end of 2024, assuming Avaya recognizes revenue over time according to percentage of completion. 4. Prepare a partial balance sheet to show…
Roe Construction Company uses the percentage-of-completion method of accounting. In 2021, Roe began work on a contract it had received which provided for a contract price of $15,000,000. Other details follow: 2021 Costs incurred during the year $7,200,000 Estimated costs to complete as of December 31 4,800,000 Billings during the year 6,600,000 Collections during the year 3,900,000 What should be the gross profit recognized in 2021?
A company uses the percentage-of-completion method of accounting. In 2020, the company began work a project, which had a contract price of $28,500. Other details follow: 2020 2021 Costs incurred to date $6,000 $18,000 Estimated costs to complete, as of December 31 14,000 -0- Billings to date 4,250 16,700 Collections to date 3,800 15,120 In the journal entry to record construction expense, construction revenue, and gross profit for 2021, how much should Construction in Process be debited/credited? (Just enter the amount. DO NOT put a plus or minus sign in front of the amount.) (Do not round your answers in any part of the computation.)
Santiago builders began construction work in 2021 for a project with contract price of P24,000,000. Santiago Builders uses percentage of completion. The financial statements for 2021 relating to the contract show the following: Accounts receivable. P 1,500,000 Construction in progress. 4,800,000 Contract billings to date. 4,500,000 Realized gross profit in 2021. 600,000 1.Compute the total cost incurred to date A.4,200,000. C. 5,400,000 B.4,800,000. D. 5,100,000 2.Compute the cash collection during 2021 A.3,000,000. C. 2,100,000 B.4,200,000. D. 3,900,000