Indiana Co. began a construction project in 2018 with a contract price of $162 million to be received when the project is completed in 2020. During 2018, Indiana incurred$33 million of costs and estimates an additional $85 million of costs to complete the project. Indiana recognizes revenue over time and for this project recognizes revenueover time according to the percentage of the project that has been completed.Suppose that, in 2019, Indiana incurred additional costs of $64 million and estimated an additional $51 million in costs to complete the project. Indiana (Do not round yourpercentage calculated):Multiple ChoiceRecognized $3.00 million loss on the project in 2019.Recognized $6.13 million gross profit on the project in 2019.Recognized $3.13 million loss on the project in 2019.Recognized $3.13 million gross profit on the project in 2019.

Cost Accounting- It is branch of that ascertains cost associated with the production of certain…

Answered: Indiana Co. began a construction…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Novak, Inc. began work on a $ 6,466,000 contract in 2020 to construct an office building. During 2020, Novak, Inc. incurred costs of $ 1,547,340, billed its customers for $ 1,085,000, and collected $ 1,013,000. At December 31, 2020, the estimated additional costs to complete the project total $ 3,003,660.Prepare Novak’s 2020 journal entries using the percentage-of-completion method
In 2018, the Laguna Inc entered into a contract to construct a road for 5th Avenue for $14,000,000. The road was completed in 2018. Information related to the contract is as follows: 1. Calculate the amount of gross profit to be recognized in each of the three years under percentage-of-completion method of accounting for long-term construction contracts. 2. Calculate the amount of gross profit to be recognized in each of the three years under completed contract method of accounting for long-term construction contracts.
Lake Construction Company has consistently used the percentage of completion method in recognizing income. During 2021, Lake entered into a fixed-price contract to construct an office building for P10,000,000. Information relating to the contract is as follows: As of December 31 2021 2022 Percentage of completion 20% 60% Estimated total cost at completion P 7,500,000 P 8,000,000 Income recognized (cumulative) 500,00 1,200,000 Contract costs incurred during 2022 were: 3,200,000 3,300,000 3,500,000 4,800,000 Gross profit recognized during 2022 amounted to: 100,000 300,000 600,000 700,000
The year 2021 was correct, But the year 2022 and 2023 were incorrect answers
Vala
On February 1, 2018, Arrow Construction Company entered into a three-year construction contract to build a bridge for MR Inc for a price of $20 million. During 2018, costs of $4 million were incurred with estimated costs of $12 million yet to be incurred. In 2019, costs incurred were $8 million with remaining costs estimated to be $5 million. The project was completed in 2020 after additional costs of $5.5 million were incurred. The company's fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage-of-completion, and the bridge under construction is deemed to be under the control of MR Inc throughout the construction period. Compute the amount of revenue and gross profit or loss to be recognized by Arrow in 2018, 2019, and 2020.
Cc.63.
On April 12, 2021, Jacob’s Construction contracted to build a 400 Unit Apartment Complex at a contract price of $85 million. The schedule of expected (which equals actual) cash collections and contract direct costs (excluding SG&A) is as follows: Year Cash Collections Cost Incurred 2021 $60 million $ 45 million 2022 20 million 27 million Total $80 million $72 million Calculate the Gross Profit for the Total Contract Calculate the Gross Margin for the Total Contract Calculate the revenue for 2021 Calculate the revenue for 2022 Calculate the gross profit for 2021 Calculate the gross profit for 2022 Calculate the gross margin for 2021 Calculate the gross margin for 2022
Moonlight Construction Company had a contract starting April 2020, to construct a P9,000,000 building that is expected to be completed in September 2022, at an estimated cost of P8,250,000. At the end of 2020, the costs to date were P3,795,000 and the estimated total costs to complete had not changed. The progress billings during 2020 were P1,800,000 and the cash collected during 2020 was 1,200,000. At December 31, 2020 Moonlight would report Construction in Process in the amount of:
In 2024, Cupid Construction Company (CCC) began work on a two-year fixed price contract project. CCC recognizes revenue over time according to percentage of completion for this contract, and provides the following information (dollars in millions): Accounts receivable, 12/31/2024 (from construction progress billings) $ 37.5 Actual construction costs incurred in 2024 $ 135 Cash collected on project during 2024 $ 105 Construction in progress, 12/31/2024 $ 207 Estimated percentage of completion during 2024 60% What were the construction billings by CCC during 2024?
On February 1, 2024, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,000,000. During 2024, costs of $2,000,000 were incurred with estimated costs of $4,000,000 yet to be incurred. Billings of $2,500,000 were sent, and cash collected was $2,250,000. In 2025, costs incurred were $2,500,000 with remaining costs estimated to be $3,600,000. 2025 billings were $2,750,000, and $2,475,000 cash was collected. The project was completed in 2026 after additional costs of $3,800,000 were incurred. The company’s fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion. Required: 1. Calculate the amount of revenue and gross profit or loss to be recognized in each of the three years. 2a. Prepare journal entries for 2024 to record the transactions described (credit "Cash, Materials, etc." for construction costs incurred). 2b. Prepare journal entries for 2025 to record the transactions…
In 2021, the Kokosing Construction Company of Columbus, Ohio entered into a contract to construct a road for Franklin County for $20,000,000. The road was completed in 2023. Information pertaining to the contract is provided below: 2021 2022 2023 Costs incurred during the year Estimated costs to complete as of year end Billings during the year Cash Collections during the year $4,800,000 $7,200,000 $4,400,000 11,200,000 4,000,000 4,000,000 8,000,000 8,000,000 3,600,000 7,200,000 9,200,000 Kokosing recognizes revenue over time according to percentage of completion. Required: 1. Compute the amount of revenue and gross profit to be recognized in 2021, 2022, and 2023. 2. Prepare the necessary journal entries for 2021 and 2022. Use the following accounts for your journal entries - "Construction in Progress", "Cash, Materials etc.", "Accounts Receivable", "Billings on Construction in Progress", "Cash", "Cost of Construction", and "Revenue from Long-term contracts". 3. Prepare a partial…

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