On July 1, 2016, Sorrel Construction obtained a contract to build a 10-door townhouse in San Juan City at a total contract price of P32M. It uses percentage of completion to account for this contract. The company estimated that the total costs at completion would be P24M. Expected date of completion is June 30, 2018, but the project was delayed for 5 weeks. The townhouse was finally turn-over to the client 6 weeks after June 30, 2018. The provision of the contract includes the following: > 10% mobilization fee payable upon signing of the contract. This amount is deductible from the last billing. > 5% of the amount billed is retained by the client. The total retention fee is payable to the contractor at the turn-over date. > Penalty clause to the effect that the client will deduct P60,000 from the contract price for each week of delay. Below are data pertaining to the construction: 2016 2017 2018 12,000,000 16,800,000 Cost Incurred 6,000,000 6,200,000 6,000,000 Billings to client ?

On July 1, 2016, Sorrel Construction obtained a contract to build a 10-door townhouse in San Juan City at a total contract price of P32M. It uses percentage of completion to account for this contract. The company estimated that the total costs at completion would be P24M. Expected date of completion is June 30, 2018, but the project was delayed for 5 weeks. The townhouse was finally turn-over to the client 6 weeks after June 30, 2018. The provision of the contract includes the following: > 10% mobilization fee payable upon signing of the contract. This amount is deductible from the last billing. > 5% of the amount billed is retained by the client. The total retention fee is payable to the contractor at the turn-over date. > Penalty clause to the effect that the client will deduct P60,000 from the contract price for each week of delay. Below are data pertaining to the construction: 2016 2017 2018 12,000,000 16,800,000 Cost Incurred 6,000,000 6,200,000 6,000,000 Billings to client ?

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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