On April 1, 2025, Sandhill Inc. entered into a cost plus fixed fee contract to construct an electric generator for Sweet Acacia Corporation. At the contract date, Sandhill estimated that it would take 2 years to complete the project at a cost of $2,060,000. The fixed fee stipulated in the contract is $468,000. Sandhill appropriately accounts for this contract under the percentage-of-completion method. During 2025, Sandhill incurred costs of $762,200 related to the project. The estimated cost at December 31, 2025, to complete the contract is $1,297,800. Sweet Acacia was billed $584,000 under the contract. Prepare a schedule to compute the amount of gross profit to be recognized by Sandhill under the contract for the year ended December 31, 2025. (If an amount reduces the account balance then enter with negative sign., e.g. -45 or parentheses e.g. (45).) SANDHILL INC.

On April 1, 2025, Sandhill Inc. entered into a cost plus fixed fee contract to construct an electric generator for Sweet Acacia Corporation. At the contract date, Sandhill estimated that it would take 2 years to complete the project at a cost of $2,060,000. The fixed fee stipulated in the contract is $468,000. Sandhill appropriately accounts for this contract under the percentage-of-completion method. During 2025, Sandhill incurred costs of $762,200 related to the project. The estimated cost at December 31, 2025, to complete the contract is $1,297,800. Sweet Acacia was billed $584,000 under the contract. Prepare a schedule to compute the amount of gross profit to be recognized by Sandhill under the contract for the year ended December 31, 2025. (If an amount reduces the account balance then enter with negative sign., e.g. -45 or parentheses e.g. (45).) SANDHILL INC.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Curtiss Construction Company, Incorporated, entered into a fixed price contract with Axelrod Associates on July 1, 2024, to construct a four story office building. At that time, Curtiss estimated that it would take between two and three years to complete the project. The total contract price for construction of the building is $4,240,000 The building was completed on December 31, 2026 Estimated percentage of completion, accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Axelrod under the contract were as follows Percentage of completion Cests incurred to date Estimated costs to complete Billings to Axelrod, to date Required: At 12-11-2024 10% At 12-31-2025 $2,688,000 1,792,000 AT 12-11-2026 60% 100% $ 4,534,000 4,240,000 $363,000 3,267,000 724,000 2,250,000 1. Compute gross profit or loss to be recognized as a result of this contract for each of the three years. Curtiss concludes that the contract does not qualify for revenue…
YellowStone Construction is constructing an office building under contract for LimeStone Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $1300000 each quarter. The total contract price is $15600000 and YellowStone estimates total costs of $17500000. YellowStone estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At December 31, 2022, YellowStone Construction estimates that it is 75% complete with the building; however, the estimate of total costs to be incurred has risen to $17750000 due to unanticipated price increases.YellowStone Construction completes the remaining 25% of the building construction on December 31, 2023, as scheduled. At that time the total costs of construction are $18500000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that YellowStone will recognize for the year ended December 31, 2023? Revenue Expenses…
Seasons Construction is constructing an office building under contract for Cannon Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of $5,000,000 each year. The total contract price is $15,000,000 and Seasons estimates total costs of $12,000,00O. Seasons estimates that the building will take 3 years to complete, and commences construction on January 2, 2021. At December 31, 2021, Seasons estimates that it is 30% complete with the construction, based on costs incurred, which are consistent with the original estimate. Prepare the journal entries required in 2021, if any, to record construction costs, revenues, and billings.
At the beginning of 2009, Florida Road Construction entered into a contract to build a road for the government. Construction will take four years. Th e following information as of 31 December 2009 is available for the contract: Total revenue according to contract $10,000,000 Total expected cost $ 8,000,000 Cost incurred during 2009 $ 1,200,000 Assume that the company estimates percentage complete based on costs incurred as a percentage of total estimated costs. Under the completed contract method, how much revenue will be reported in 2009? A . None.
Grouper, Inc. began work on a $6,491,000 contract in 2020 to construct an office building. During 2020, Grouper, Inc. incurred costs of $1,941,020, billed its customers for $1,138,000, and collected $904,000. At December 31, 2020, the estimated additional costs to complete the project total $3,304,980.Prepare Grouper’s 2020 journal entries using the percentage-of-completion method.
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Westgate recognizes revenue over time according to percentage of completion. Revenue Gross profit (loss) Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. Note: Do not round intermediate calculations. Loss amounts should be indicated with a minus sign. Answer is complete and correct. 2024 $ 2,400,000 5,600,000 2,000,000 1,800,000 2024 $ 3,000,000 $ $ 600,000 $ 2025 2026 4,500,000 $ 2,500,000 900,000 $ 300,000 2025 $ 3,600,000 2,000,000 4,000,000 3,600,000 2026 $ 2,200,000 0 4,000,000 4,600,000
On February 1, 2021, Arrow Construction Company entered into a three-year construction contract to build a bridge for a price of $8,360,000. During 2021, costs of $2,120,000 were incurred with estimated costs of $4,120,000 yet to be incurred. Billings of $2,620,000 were sent, and cash collected was $2,370,000. In 2022, costs incurred were $2,620,000 with remaining costs estimated to be $3,780,000. 2022 billings were $2,870,000 and $2,595,000 cash was collected. The project was completed in 2023 after additional costs of $3,920,000 were incurred. The company’s fiscal year-end is December 31. Arrow recognizes revenue over time according to percentage of completion. Required:1. Compute the amount of revenue and gross profit or loss to be recognized in 2021, 2022, and 2023 using the percentage of completion method.2a. Prepare journal entries for 2021 to record the transactions described (credit "various accounts" for construction costs incurred).2b. Prepare journal entries for 2022 to…
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
In 2024, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2026. Information related to the contract is as follows: Cost incurred during the year Estimated costs to complete as of year-end Billings during the year Cash collections during the year Assume that Westgate Construction's contract with Santa Clara County does not qualify for revenue recognition over time. Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years. 2-a. In the journal below, complete the necessary journal entries for the year 2024 (credit "Cash, Materials, etc." for construction costs incurred). 2024 $ 2,739,000 5,561,000 2,300,000 2,100,000 Cost incurred during the year Estimated costs to complete as of year-end 2025 $ 3,735,000 1,826,000 4,174,000 3,900,000 2024 $ 2,430,000 5,630,000 2-b. In the journal below, complete the necessary journal entries for the year…
On January 1, 2021, Turnstile Construction Company Inc. contracted to build a medical practice office building for Medicine Points Inc. for a total contract price of $2,000,000. On January 1, Turnstile estimated that it would take three years to complete the building. On December 31, 2023, the building was completed. Following are contract costs incurred, estimated costs to complete the contract, and accumulated billings to Medicine Points Inc. for 2021, 2022, and 2023 At 12/31/21 At 12/31/22 At 12/31/23 Contract costs incurred to date $ 540,000 $1,600,000 Estimated costs to complete the contract 1,500,000 500,000 Billings to Medicine Inc. $2,200,000 -0. 300,000 1,400,000 2,000,000 Required: Assuming this contract meets the requirements for recognizing revenue over time, prepare schedules to compute the profit or loss Turnstile Company would recognize as a result of this contract for the years ended December 31, 2021, 2022, and 2023.
Oriole Construction Company began operations on January 1, 2025. During the year, Oriole Construction entered into a contract with Winds Corp. to construct a manufacturing facility. At that time, Oriole estimated that it would take 5 years to complete the facility at a total cost of $4.484,000. The total contract price for construction of the facility is $5,972,000. During the year, Oriole incurred $1,082,400 in construction costs related to the construction project. The estimated cost to complete the contract is $4,329,600. Winds Corp. was billed and paid 25% of the contract price. (a) Prepare schedules to compute the amount of gross profit to be recognized for the year ended December 31, 2025, and the amount to be shown as "costs and recognized profit in excess of billings" or "billings in excess of costs and recognized profit" at December 31, 2025, under each of the following methods. (Enter negative amounts using either a negative sign preceding the number eg.-45 or parentheses…
In 2019, Tarlo Company agrees to construct a highway for Brice County over a 3-year period (2019 through 2021). The contract price is $1,200,000, and the construction costs (both actual and estimated) total $705,000 for the 3 years. Tarlo's estimate of progress toward satisfaction of the performance obligation at the end of each year is as follows: 2019, 20%; 2020, 75%; 2021, 100%. Required: 1. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year assuming the performance obligation is determined to be satisfied over time. Tarlo Company Gross Profit: Percentage-of Completion Method 2019 through 2021 Amount 2019 $ 2020 2021 Total gross profit $ 2. Prepare a schedule showing the amount of gross profit that Tarlo recognizes each year assuming the performance obligation is satisfied at a point in time. If an amount is zero, enter "0". Tarlo Company Gross Profit: Completed-Contract Method 2019 through 2021…