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 Gross profit/ (loss) 2023 $ $ 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 913,000 1,890,000 1,750,000 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Ente 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.) $ 2025 $ 2,365,000 2024 -0- 3,460,000 2,950,000 -107450 $ tA 2025 40450

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 Gross profit/ (loss) 2023 $ $ 689,850 1,200,150 1,100,000 1,000,000 2023 2024 573050 $1,162,000 913,000 1,890,000 1,750,000 Calculate the gross profit / (loss) that should be recognized for 2023, 2024, and 2025 using the percentage completion method. (Ente 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.) $ 2025 $ 2,365,000 2024 -0- 3,460,000 2,950,000 -107450 $ tA 2025 40450

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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Concept explainers

Contract Costing

Contract costing is about tracing particular costs related to a particular contract entered into with the customer. It is one of the forms of job order costing. It is useful in long-term contracts at the most. It is seen that substantial time is required for the completion of the contract which takes different accounting periods. Thus, it is very much helpful for recognizing the costs associated with it and accounting in their specific accounting periods.

Question

100%

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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