On July 1, 2025, Wildhorse Construction Company Inc. contracted to build an office building for Indigo Corp. for a total contract priceof $1,880,000. On July 1, Wildhorse estimated that it would take between 2 and 3 years to complete the building. On December 31,2027, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs tocomplete the contract, and accumulated billings to Indigo for 2025, 2026, and 2027.At12/31/25At12/31/26At12/31/27Contract costs incurred to date$286,900 $1,122,900 $2,066,700Estimated costs to complete the contract1,223,100847,100-0-Billings to Indigo300,0001,100,0001,830,000(a1)(a2)Using the percentage-of-completion method, prepare a schedule to compute the profit or loss to be recognized as a result of thiscontract for the year ended December 31, 2026. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank.)× Your answer is incorrect.>2026Profit/(Loss) Recognized in 2025tA$S+A

Percentage of completion method is the method used in the construction accounting as it helps in…

On July 1, 2025, Wildhorse Construction Company Inc. contracted to build an office building for Indigo Corp. for a total contract price of $1,880,000. On July 1, Wildhorse estimated that it would take between 2 and 3 years to complete the building. On December 31, 2027, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Indigo for 2025, 2026, and 2027. At 12/31/25 At At 12/31/26 12/31/27 Contract costs incurred to date $286,900 $1,122,900 $2,066,700 Estimated costs to complete the contract 1,223,100 847,100 -0- Billings to Indigo 300,000 1,100,000 1,830,000 (a1) 229 (a2) * Your answer is incorrect. Using the percentage-of-completion method, prepare a schedule to compute the profit or loss to be recognized as a result of this contract for the year ended December 31, 2026. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank.) > 2026 $ $ $ $ Profit/(Loss) Recognized in 2025

On July 1, 2025, Wildhorse Construction Company Inc. contracted to build an office building for Indigo Corp. for a total contract price of $1,880,000. On July 1, Wildhorse estimated that it would take between 2 and 3 years to complete the building. On December 31, 2027, the building was deemed substantially completed. Following are accumulated contract costs incurred, estimated costs to complete the contract, and accumulated billings to Indigo for 2025, 2026, and 2027. At 12/31/25 At At 12/31/26 12/31/27 Contract costs incurred to date $286,900 $1,122,900 $2,066,700 Estimated costs to complete the contract 1,223,100 847,100 -0- Billings to Indigo 300,000 1,100,000 1,830,000 (a1) 229 (a2) * Your answer is incorrect. Using the percentage-of-completion method, prepare a schedule to compute the profit or loss to be recognized as a result of this contract for the year ended December 31, 2026. (Ignore income taxes.) (If answer is 0, please enter 0. Do not leave any fields blank.) > 2026 $ $ $ $ Profit/(Loss) Recognized in 2025

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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SMDC Construction is constructing an office building under contract for Onyx Company and uses the percentage-of-completion method. The contract calls for progress billings and payments of P1,550,000 each quarter. The total contract price is P18,600,000 and SMDC Construction estimates total costs of P17,750,000. SMDC Construction estimates that the building will take 3 years to complete, and commences construction on January 2, 2018. SMDC Construction completes the remaining 25% of the building construction on December 31, 2020, as scheduled. At that time the total costs of construction are P18,750,000. What is the total amount of Revenue from Long-Term Contracts and Construction Expenses that SMDC Construction will recognize for the year ended December 31, 2020? Revenue Expenses A. P18,600,000 P18,750,000 B. P4,650,000 P 4,687,500 C. P4,650,000 P 5,250,000 D. P4,687,500 P 4,687,500 Group of answer choices D C B A
Kingbird Construction Company began work on a $418,500 construction contract in 2020. During 2020, Kingbird incurred costs of $285,500, billed its customer for $233,000, and collected $172,000. At December 31, 2020, the estimated additional costs to complete the project total $155,765.Prepare Kingbird’s journal entry to record profit or loss, if any, using (a) the percentage-of-completion method and (b) the completed-contract method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts. Round answers to 0 decimal places, e.g. 5,275.) No. Account Titles and Explanation Debit Credit (a) enter an account title to record the transaction using the percentage-of-completion method enter a debit amount enter a credit amount enter an account title to record the transaction using the percentage-of-completion method enter a debit…
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.
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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…
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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: 2025 Cost incurred during the year. Estimated costs to complete as of year-end Billings during the year 2024 $ 2,059,000 5,041,000 2,190,000 $ 2,627,000 2,414,000 2,496,000 2026 $ 2,655,400 0 5,314,000 Cash collections during the year 1,895,000 2,400,000 5,705,000 Westgate recognizes revenue over time according to percentage of completion. 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. Revenue Gross profit (loss) 2024 2025 2026
Cullumber, Inc. began work on a $7,164,000 contract in 2020 to construct an office building. During 2020, Cullumber, Inc. incurred costs of $1,960,630, billed its customers for $1,255,000, and collected $920,000. At December 31, 2020, the estimated additional costs to complete the project total $3,338,370.Prepare Cullumber’s 2020 journal entries using the percentage-of-completion method. (Credit account titles are automatically indented when amount is entered. Do not indent manually. For costs incurred use account Materials, Cash, Payables. If no entry is required, select "No entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit enter an account title to record costs incurred enter a debit amount enter a credit amount enter an account title to record costs incurred enter a debit amount enter a credit amount (To record costs incurred.) enter an account title to record billings enter a debit amount…