In 20x1, Salamagi Co. entered into a contract with a customer. The contract stipulates the following: Contract price of ₱20,000,000 5% mobilization fee due upon signing of the contract, to be deducted from the final billing 10% customer retention on all subsequent progress billings, to be paid to Salamagi on completion of the project. Salamagi Co. estimated a ₱5,000,000 gross profit from the project. The percentage of completion method will be used. In 20x1, Salamagi billed the customer for 50% completion of the project. The customer accepted all the billings, except one for 10% which was accepted on January of the following year. All the accepted billings were collected during the year except an 8% billing which was due January of the following year. What is the amount of profit recognized from the contract in 20x1? 2,500,000 c. 2,720,000 2,650,000 d. 2,900,000 What is the total amount of collections from the billings in 20x1? 5,760,000 c. 6,760,000 6,400,000 d. 7,400,000
In 20x1, Salamagi Co. entered into a contract with a customer. The contract stipulates the following: Contract price of ₱20,000,000 5% mobilization fee due upon signing of the contract, to be deducted from the final billing 10% customer retention on all subsequent progress billings, to be paid to Salamagi on completion of the project. Salamagi Co. estimated a ₱5,000,000 gross profit from the project. The percentage of completion method will be used. In 20x1, Salamagi billed the customer for 50% completion of the project. The customer accepted all the billings, except one for 10% which was accepted on January of the following year. All the accepted billings were collected during the year except an 8% billing which was due January of the following year. What is the amount of profit recognized from the contract in 20x1? 2,500,000 c. 2,720,000 2,650,000 d. 2,900,000 What is the total amount of collections from the billings in 20x1? 5,760,000 c. 6,760,000 6,400,000 d. 7,400,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
In 20x1, Salamagi Co. entered into a contract with a customer. The contract stipulates the
following:
- Contract price of ₱20,000,000
- 5% mobilization fee due upon signing of the contract, to be deducted from the final billing
- 10% customer retention on all subsequent progress billings, to be paid to Salamagi on
completion of the project. Salamagi Co. estimated a ₱5,000,000 gross profit from the project. The percentage of completion method will be used. In 20x1, Salamagi billed the customer for 50% completion of the project. The customer accepted all the billings, except one for 10% which was accepted on January of the following year. All the accepted billings were collected during the year except an 8% billing which was due January of the following year.
- What is the amount of profit recognized from the contract in 20x1?
- 2,500,000 c. 2,720,000
- 2,650,000 d. 2,900,000
- What is the total amount of collections from the billings in 20x1?
- 5,760,000 c. 6,760,000
- 6,400,000 d. 7,400,000
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